Half-price pizza. Furloughs that meant staff were paid for doing nothing. Soft loans for companies, bailouts for the arts, and lots and lots of schemes to get people back into work. In less than a year in office, Rishi Sunak has proved to be one of the most hyperactive Chancellors the UK has ever seen.
In his conference speech on Monday, he kept up the pace, launching a new round of support for retraining. He hasn’t yet unveiled his Christmas rescue plan (half-price trees, perhaps, plus free sparkling lights so long as they are energy saving, under the name “Elf Out to Help Out”) but heck it is only October. He can launch that next week.
In part, his approach has been brilliantly successful. Sunak is smooth, relaxed and competent. He is that rarest of beasts, a genuinely popular Chancellor. But he also risks turning into Gordon Brown on steroids, a finance minister addicted to eye-catching initiatives, but with little real substance. The Covid-19 crisis is an extraordinarily difficult challenge to deal with, but it is also an opportunity for radical change, and right now Sunak risks letting that go to waste.
Sunak’s speech to the Conservative Party Conference on Monday, delivered online (watch the recording below), was very much what we have come to expect from the Chancellor. A few hundred million on a new wheeze for employment support. Some stern words about “hard choices”, but delivered with such cheery panache they don’t sound very tough at all. And lots of hints of more help to come. Here’s the problem, however: he could be doing so much more.
In fairness, the Chancellor of the Exchequer was never going to be an easy gig during the worst epidemic the world has witnessed in a century. With the economy in lockdown, and with output falling at the fastest rate ever recorded, he had to improvise at record speed. Companies had to be rescued, and employees supported at a time when, for no fault of their own, they were no longer able to operate normally.
Has he got everything right? Probably not. But it is unlikely that anyone else would have played the hand he was dealt any better and most politicians would have done far worse. Sunak has been quick, responsive and competent. He is the most popular Chancellor for more than a decade (see chart below). Yet we still don’t know much about what Sunak really stands for. And while he has kept the economy afloat, there is not much sign of genuine reform.
The political adage “don’t let a good crisis go to waste” has stuck around for a long time (it is first credited in a slightly different form to Machiavelli) precisely because it is so apt. The Chancellor could be using the crisis, and his current popularity, to push through some genuinely radical changes to the way the British economy works. Here are three he could be considering.
First, planning laws. The way we use the space available to us is a complete mess. We already had far too much devoted to retailing, with boarded up town centres. Now we are about to have way too much office space, and possibly too many bars and restaurants as well. At the same time, we have a critical shortage of housing (and our houses are way too small now that we work from them as well).
The answer is staring everyone in the face. Convert all that space into affordable housing. Only the planning laws stand in the way. The Government is tinkering around the edges when it should be using the crisis to suspend all the usual rules. Let the market decide how to allocate land. It could hardly do any worse than the regulators have done.
- Robert Jenrick: Radical reforms to our planning system will get Britain building
Second, employment rights. With up to a third of the country working from home we have a one-off opportunity to create a system of employment rights and obligations designed for a flexible, inclusive, gig-based 21st-century labour market replacing one that seems to assume we all work in hierarchical manufacturing companies from 100 years ago.
With the rise of self-employment and gig work, this was already painfully obvious, but working from home has made it even more so. Companies don’t want office drones clocking in for 40 hours a week, and staff don’t want to commute into a place they didn’t enjoy much anyway. We should create hybrid home worker employment laws, but we need to do that from scratch rather than just assume the old rights still apply.
Thirdly, tax reform. With debt hurtling past 100pc of GDP, and with the deficit up to war-time levels, the Treasury is already floating plans for tax rises. Sure, the debt will have to be paid off one day. But Sunak has the opportunity to make two big changes. He could accept that in a world of zero interest rates, a lot more debt is sustainable for a lot longer.
More importantly, instead of simply pushing through a rise in stamp duty here and a hike in capital gains tax there, why not rip up the entire tax system and start again from scratch (and here’s a hint – tax spending, not saving, and reward entrepreneurs). The opportunity is there to make fundamental changes that won’t come again.
- Read more: How much debt is too much?
In truth, those are just three examples. It would be easy to list a dozen more. The Covid-19 crisis has opened up space to push through reforms that would be impossible in more normal times.
Our economy, just like those of all our main rivals, will be weakened by the epidemic. There is no getting away from that. But if the Chancellor seized the opportunity for lasting reforms it could not only bounce back but do so more strongly. That kind of recovery, not half-price pizza, should be Sunak’s legacy. If he leaves it much longer, it will be too late.