A tax-cutting budget without any tax cuts Rishi Sunak played a trick at the despatch box

There’s an old European folk tale about a man who claims he can make soup from a stone. He gathers an entire village together to demonstrate this impossible feat. Having added the stone to the boiling water, he samples his concoction. Pronouncing himself satisfied, he casually suggests that a little salt might enhance the flavour… and then perhaps an added garnish. A handful of beans might work too and so on and so forth. Grudgingly, and then with increasing enthusiasm, the villagers supply these extra ingredients. Before long the stone soup develops into a hearty broth — albeit not one that owes much to the stone.

Depending on the story-teller, this is a fable about gullibility, the benefits of sharing or the human need to feel part of something bigger than oneself.

In other news, the Chancellor turned up to the Commons today with his Red Box, from which he produced… a stone. Nevertheless he managed to make a soup from it — which is to say a tax-cutting Budget without actual tax cuts.

Rishi Sunak admitted as much himself. Government spending and taxation were at very high levels because of the response to Covid. He didn’t like it, but he wouldn’t apologise for it. The tax burden would go down eventually, but not until the end of the current Parliament.

And yet Sunak ensured that his 2021 Budget would be remembered for tax cuts — or rather the impression of tax cuts. For instance, there’ll be lower duties on draught beer, fruit ciders and — in a huge concession to hun culture — sparkling wine. However, these were offset by increased rates on stronger drink.

Other ‘tax cuts’ were, in fact, the cancellation of previously planned tax rises — on fuel, for instance. And then there was the traditional rabbit, as produced at the end of every Budget statement. This time, the final flourish had been pre-announced: we were already expecting the Chancellor to cut the rate at which Universal Credit is withdrawn as people earn more. The twist was that the bunny was bigger than we’d been led to believe.

But, strictly speaking, this wasn’t a tax cut either — and certainly not if one takes into account the end of the £20 boost to UC. The same goes for the increase in the National Living Wage, which is paid by employers, not the state.

However, these measures do form part of a coherent philosophy. Sunak stressed that Government cannot be the answer to every problem. The rest of us have to contribute to the recovery too. To this end the policy framework is being systematically realigned in favour of things that most directly grow the British economy.

Thus there’ll be cuts to benefits, but boosts to take-home pay. Corporation taxes are still heading up, but there’ll be more tax relief on investment. As for Air Passenger Duty, the burden will shift from domestic to long haul flights.

It’s not difficult to work out what the Chancellor is doing here. He is persuading all of us — individuals and businesses — to add to the soup.

Just ignore the stony aftertaste.

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