So what will Sunak do in November? Follow the Hippocratic principle of “primum non nocere” and defer the big decisions for another day, according to one of his recent predecessors, Philip Hammond. Hammond says the Chancellor’s priority will be supporting the economy; “he will probably defer the big questions” simply because it is impossible to answer them.
“I think it will be quite difficult for him to make the big decisions in November and I think he has realised that, which is why he is signalling he will hold a mini-Budget,” he says.
“By the spring we are going to know two things – whether or not there is a Covid vaccine on the horizon, and whether we can start moving back to normality next summer with a view to having a vaccinated population for winter 2021/22, and we are going to know whether we have left [the EU] with some kind of a deal or no kind of a deal – and by spring the kind of problems that no deal brings will become apparent.
“Rishi has potentially got a double shock to address next year. My guess is that he will do some cosmetic things in November and leave the big things until the spring.”
Those “cosmetics” could include infrastructure investment ahead of the bigger decisions in the spring, the former Chancellor suggests, in the spirit of the March Budget hijacked by Covid-19. “The mantra doesn’t change, it is all about productivity. Anything that will improve the UK’s productivity and competitiveness has to be a good thing right now.”
However Hammond opposes some kind of furlough extension – likely to be the Chancellor’s biggest call – on the grounds that it will delay the reshaping of the economy and the reskilling of workers.
Two other recent occupants of 11 Downing Street have meanwhile warned against hasty tax rises, with both George Osborne and Sajid Javid urging him to “encourage the risk-takers” at a Centre for Policy Studies conference this month. Spending departments could be targeted for “billions in savings”, Javid said.
Osborne pointed out that “the truth is there are not out there the tax rises that are publicly acceptable that will raise significant sums of money” – at least without breaking manifesto commitments not to raise VAT, income tax and national insurance, which account for more than two thirds of the national tax take.
Stuart Adams, a tax expert at the Institute for Fiscal Studies, argues that with the economy so weak, “in the short run he shouldn’t be looking to raise taxes at all for at least another couple of years”.