Spring Budget 2024: Will Jeremy Hunt focus more on the economy or the election?

Hands up, who remembers the pasty tax of 2012? 

After then-Chancellor George Osborne aimed to smooth out VAT anomalies on hot food, imposing a 20 per cent levy on Britain’s beloved steak bakes, he quickly learned his lesson. 

Forced into a U-turn so damaging that it still crops up in jokey intros 12 years later, it was strong evidence for the case that budgets are first and foremost political by nature.

Former Labour MP, and ex-shadow Chancellor, Chris Leslie reckons so. “Budgets are 80 per cent political and the OBR makes it a little bit economic,” he told City A.M.

When Osborne was first in post, Leslie adds, he “did all sorts of civil service things… nice, neat, sensible corrections to the tax code, but which the opposition can spin as a new tax.” 

“So he quickly learned to stop doing that. Most of it is about setting out elephant traps for the opposition, hoping they’ll fall into it,” he added. 

Listeners to Osborne and Ed Balls’ new podcasting venture ‘Political Currency’ may conclude he’s come around to share Leslie’s view.

“It’s a good moment… when [backbench MPs are] all waving the order papers – if they’re not, you’re in real trouble,” Osborne reminisced in a recent episode. 

The context of Hunt’s choices this time also add weight to the argument that his real focus in this budget will likely be on vote-winning, rather than shrewd accounting. 

Well into an election year, with the Conservatives polling at record lows, Tory MPs will be hoping he is able to deliver some policies that will win over wavering voters. 

“It’s an opportunity for the Conservatives to try and reassert their authority over the political direction of travel,” Ipsos research director Keiran Pedley told City A.M.

One reported move likely to annoy Labour is the policy of abolishing the non-domiciled tax status as a potential revenue raiser for Hunt.

Max Anderson, associate fellow at centre-right think tank Brightblue, described the planned move – which Starmer and Reeves would have used both to fund public spending pledges and to attack Rishi Sunak’s wife, former non-dom Akshata Murty – as “sensible” and “quite clever” as it neutralises an opposition attack. 

“Fiscally, there are questions as to whether this will do that much revenue raising, especially when the Chancellor hopes this will help him cut taxes on income tax or national insurance. But politically, I think this has the potential to be quite a smart move,” he told City A.M. 

But others suggest this play could backfire. 

“It is a real sign of a government that seems to have entirely run out of ideas, that they have started to lift policies from Labour… particularly policies they have historically considered to be totemic of who they are,” as Labour Together’s director of strategy Josh Williams put it.

Politicians and think tank types are, of course, more likely than most people to view budgets through a political lens. 

But while the budget decision of abolishing non-dom status could produce a big political win, it could also be economically damaging.

Critics of the move will argue that taxing the rich more and more won’t make this country successful, and instead we should encourage wealth creators and entrepreneurs to make Britain home to global success stories.

With the UK falling into a recession at the end of last year, Hunt can’t simply ignore the economy in this fiscal statement. From the cost of living crisis to rising mortgage payments, economic issues are top of mind among the electorate right now.

Try as Hunt might, fighting both political and economic battles in one budget is a tricky task. In a matter of hours, we’ll find out exactly how he has tried to achieve this.