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Did Jeremy Hunt’s Budget boost the Conservatives’ chances at the forthcoming will-they-won’t-they-why-don’t-they-get-on-with-it general election? Probably not. There was little that even this grown-up chancellor could do to change the picture of his party as an administration that has run out of steam.
Voters may give Hunt little thanks for a tax cut that undoes only about half the pain imposed by the freezing of tax thresholds. And many appreciate, in any case, how unwise it would have been for him to go further, given the state of the public finances. To his credit, the biggest losers from this Budget seem likely to have been wealthier earners and pensioners — who are the Tories’ core vote.
The picture for Labour is far from rosy, however. If it takes office, the party will surely have to reverse the national insurance cut, given Sir Keir Starmer’s pledge to give public services an immediate cash injection. The Office for Budget Responsibility has confirmed that growth prospects are weak. The medium-term prospects for debt are grim and the Budget’s forecasts for day-to-day spending are totally unrealistic. An increase of only 1 per cent a year would spell disaster for the Home Office, justice and local authorities — areas that are unprotected.
Starmer is playing along for the moment. The opposition is paradoxically fairly confident of winning, yet fearful of jinxing victory. So Starmer supported the chancellor’s freeze on fuel duty, despite his party’s emphasis on being green, and agreed with the NI cut for fear of looking harsh on working people. He also criticised the government for not crediting immigration for fuelling economic growth, while giving no indication of what his own policy will be. Some within Labour are urging their leader to show his hand by announcing more policy; others reckon it’s better to sit quietly and let the Conservatives blunder into oblivion.
This leaves too little clarity from either side about where sustainable growth will come from. Hunt emphasised the efforts he is making to get people back into work; Starmer intends to enact far-reaching planning reforms. The words “Norway” or “Switzerland” are still verboten in Labour, despite the obvious fact that growth could be unlocked by a closer relationship with the EU. Nor is it clear how Labour’s extensive plans to expand employment rights sit with its professed ambition to help business.
For both parties, the tight fiscal context makes reforming public services imperative. The most significant Budget announcement was an NHS productivity plan that marks a change in the Treasury’s approach to capital spending. Until now, it has tended to grind down on requests for investment in IT or buildings, reluctant to agree that sometimes the pay-off will come later.
Digitisation could drive significant improvements, by freeing up staff. This government has hired 20,000 more police officers, for example, but charge rates have barely budged. Citing remarkable improvements at the passport office, Hunt has now said productivity improvement schemes that can be shown to deliver equivalent savings over five years will be funded. The NHS has signed up to improve productivity by an annual average of 1.9 per cent, in exchange for a £3.4bn injection in data, artificial intelligence and IT.
This matters for two reasons. First, because the NHS represents about 40 per cent of day-to-day spending on public services. Second, because it is a productivity puzzle. It has much higher funding and more staff than pre-Covid, but the number of patients being treated in hospital has risen nowhere near as much, according to the Institute for Fiscal Studies.
Staff burnout could be one factor, strikes another, and the retirement of the most experienced staff has left gaps. Some patients are older and sicker by the time they are seen. But it is also increasingly hard for staff to cope with crumbling Victorian buildings, a lack of diagnostic machinery and outdated IT systems.
The ambition goes far beyond “going paperless” — though it is not quite “the robot will see you now”. A digital transformation would mean making better use of operating theatres, which are empty too often. It could transcribe doctors’ orders on the ward round, freeing them from hours of writing. It would enable staff to enter data only once, and save nurses having to call round care homes to find a bed. Digitisation and automation have already helped Chelsea and Westminster hospital trust in London cut its inpatient waiting list by 28 per cent, simply by joining up existing data.
There has been considerable resistance to such measures, partly because staff are too busy to learn new systems but also because of anxiety that they may replace jobs. The fact that AI is better at spotting some cancers than humans, for example, makes some radiologists nervous about their role. GPs have been blocking attempts to let patients access our own electronic health records. But I increasingly speak to doctors who are fed up with wrestling with computers and pagers and are desperate to get back to doing the job they signed up for: looking after patients.
Wes Streeting, shadow health secretary, has already vowed to upgrade technology in the NHS if Labour comes to power. Hunt’s move will ease his path.
What the country needs is hope. Amid what really amounts to a conspiracy of silence by the two main parties about the economic fundamentals, this was a glimmer of something positive.
camilla.cavendish@ft.com