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What Does The Spring Budget Tell Us About When An Election Could Be Called?

Rishi Sunak (alamy)

4 min read

Economists and political scientists have suggested the Spring Budget package was so "small scale" it did not indicate the government was about to go to the polls.

Chancellor Jeremy Hunt told MPs in the House of Commons on Wednesday that Government was sticking to its plan for "long term growth". He announced a slew of measures including a two per cent cut to National Insurance contributions, the abolition of the "non-dom" tax regime, and the introduction of a vape tax.

The Conservatives have been significantly behind Labour in the polls for more than a year, and at the moment, are widely expected to lose the next general election. Prime Minister Rishi Sunak must call a vote before the end of this year and is likely to want to wait for a boost in his party's popularity before he does. This week's Spring Budget was viewed by many – particularly tax-cut-hungry Tories – as a key opportunity to persuade the public to give the current Government another chance. 

But Conservative MPs found the Chancellor's Budget underwhelming and doubted it would dramatically improve the party's election performance. "I'm not sure it will shift the dial," said one Tory MP, who had criticised the Government for "switching taxes around" in the Budget.

Andrew Goodwin, Chief UK Economist at Oxford Economics, told PoliticsHome there were too few announcements which would strike a chord with voters to strongly suggest Government was poised to call an election imminently. 

“The package was so small-scale that it doesn’t make much difference to the probability of an early election," he said. "The experience of the previous National Insurance Contributions (NICs) cut announced in the Autumn Statement was that it simply didn’t cut through with voters, so there’s no reason this would be any different."

The Chancellor told Sky News his "working assumption" was a general election would be held in the Autumn but said it was ultimately a decision for the Prime Minister. Sunak has also indicated that it is more likely in the second half of the year. But during an interview with Jeremy Vine on BBC Radio 2 on Thursday, he refused to categorically rule out calling a May election. 

In its Autumn Statement in 2023, the government announced it would reduce NICs from 12 per cent to 10 per cent. The OBR estimated this would financially benefit 29 million people in Britain, according to the House of Commons Library.

However the announcement – which was expected to reduce tax receipts by £10 billion in five years – made little difference to the polls. A YouGov poll, commissioned by the Times, found the Conservatives were 26 points behind Labour at the end of February. 

Hannah Peaker, Director of Policy at the New Economics Foundation, told PoliticsHome the last cut to NICs made "zero difference to how the Conservatives were polling" and believed there was "little reason to think that yesterday’s announcements will be received any differently".

"The amounts that people get, especially those most affected by the cost of living crisis, will not suddenly make life’s essentials affordable," she said. 

Rob Ford, Political Professor at the University of Manchester, told PoliticsHome agreed the election still seemed more likely later in the year because of the Tories' persistent poor showing in the polls. 

"The only reason we would get a spring election is because the Conservative Party concluded it was going to get even worse," he said. 

"Were the announcements the kind you might see in a pre-election Budget? Yes. However, is it the kind of thing you see in a Budget outside of election time? Also yes."

Ford said very few Budgets have a major impact on polling, so a bounce may not necessarily be expected anyway.

"We're in a political environment where roughly three quarters of the electorate doesn't believe a single word that comes out of a Conservative spokesman's mouth, so why would we think that this would make a big impact?"

Paul Dales, Chief Economist at Capital Economics, told PoliticsHome that while election timing was ultimately difficult for anyone outside Downing Street to predict, waiting until the autumn would offer Hunt and Sunak more time to make further tax cuts that could make voters feel better off. 

"First, the economy should be out of recession by then, inflation should be lower and interest rates may have been reduced. That may help buoy consumer confidence. Second, if the financial markets come round to our view that interest rates will be cut sharply in 2025, then the Chancellor’s fiscal headroom may grow over the summer," he said. 

"An autumn election may provide the option for more tax cuts in another fiscal event before that election. Our sense is that the National Insurance cut announced yesterday is unlikely to boost the polls as much as a wider economic recovery could (even that may not be enough for the government)."

In private, even some Conservative MPs don't expect the Budget will buy them a poll bounce. But with such a huge gap between Labour and the Tories at the moment, the bar for what would feel better is perilously low. "Anyone will take any improvement," a former cabinet minister told PoliticsHome. 

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