“It’s not a one-off tax, it’s a special economic operation,” said one prankster. Whatever you call it, Rishi Sunak’s newfound largesse will be particularly welcome for low-income groups who will receive an extra £650 in cash to offset soaring gas and electricity prices.
Economically and socially, it was the right thing to do, and it will not be the last such measure if inflation remains high. However, it is also a special political operation to save both Sunak and his doomed Partygate colleague, the Prime Minister. As such, its success is more doubtful.
It certainly does not lack audacity. Tory MP Richard Drax’s complaint that it “throws red meat at socialists by raising taxes on businesses” is precisely why Sunak is doing it. He wisely decided that stealing only part of Labour’s windfall tax suggestion was going to be counterproductive, so he went even further than what Labor had proposed.
The effect can be particularly strong in the red wall, where beneficiaries are concentrated. Polls show that economic issues are rapidly overtaking cultural issues – and Brexit – among the lowest earners as the cost of living rises.
As with Brexit, Johnson argued in public both for and against a windfall tax before finally passing it. He doesn’t give a damn about ideology: everything is political, and the political imperative to seize the Partygate agenda was undoubtedly the paramount consideration for him.
The very fact that the tax is paid by businesses makes it a much easier political operation than last year’s National Insurance increase for the NHS and social care. Gas, oil and electric companies don’t vote, and they’re certainly not popular, even among conservatives.
The success of the political operation depends in part on what happens to inflation now. If we really go back to the inflationary 1970s, then it is the beginning of a new era of “prices and wages” policy, of which this is only the first episode.
But it also depends on whether the public has already decided that Johnson and Sunak are beyond repair and can no longer be trusted – or given another term – no matter what they do.
It is too early to know if this stage has already been reached. That Johnson and Sunak are prepared to act so quickly and so boldly demonstrates a will to power that is far from exhausted. Labor still has a lot of work to do – and good policies to steal – before the next election is lost to the Tories, even under this damaged leadership.
This article is from Andrew Adonis’ weekly newsletter for Prospect—The Insider. Get The Insider straight to your inbox every week by signing up here: