Much of the discussion in the days leading up to this week’s Budget has focused—understandably enough—on the question of corporation tax rises. This has been a debate defined in no small part by disingenuousness, perhaps characterised best in the bizarre briefings accusing parts of the Labour left of supporting austerity in welcoming increases in corporation tax; as Tom Kibasi sardonically noted, it is somewhat surprising to learn that ‘anti-austerity demos organised by activists and trade unions were because they opposed higher taxes on big business profits or on the wealthy.’

New Leadership Labour’s intention to oppose the feted rises is certainly an innovative approach to ‘authentic values alignment’: recent polling showed that voters across all demographics support a rise in corporation tax, with 65 percent of Conservative and 76 percent of Labour voters backing the move, and only 13 percent and 6 percent respectively opposing it.

The best insight into what is going on here can be found elsewhere in Tribune: with columnist Tom Blackburn noting how ‘Keir Starmer and the Labour Party are so desperate to be seen as sensible and reliable managers of British capitalism that they appear petrified of articulating any alternative set of priorities.’

As I have written previously, ‘it remains a fundamentally risky strategy to pit a lawyerly capitalist realism against nationalist fantasy in a time of intense crisis.’ Should Labour fail to set the terrain for the pandemic recovery—thus far, there appears to be little on offer besides robotic repetitions of a vision of Britain as ‘the best place to grow up in and the best place to grow old in’—the Conservative Party will have free rein to do this themselves.

Indeed, while the issue of corporation tax that has animated the fiercest debate in recent days, an underdiscussed topic—that of NHS pay—represents an equally instructive case study of the kind of political economic moment we are fast moving into. As reports from the Independent suggest, it looks likely that Rishi Sunak will overlook NHS staff in the upcoming Budget, choosing instead to wait until May—when the NHS Pay Review Body will present their findings—before embarking on any pay increases for health workers.

While Sunak may pull a proverbial rabbit out of his hat on Wednesday, this seems unlikely: back in December, as reported in the Nursing Times, Matt Hancock also suggested NHS staff would have to wait until May to receive any form of financial reward – arguing that ‘We expect these recommendations to take account of the extremely challenging fiscal and economic context, and consider the affordability of pay awards.’

All of this is in keeping with one of the more effective strategies pioneered by the Conservatives during this crisis: transforming the NHS—which they spent much of the previous decade reorganising, underfunding, and depriving of slack—into a kind of depoliticised shield, rather than the explicitly political and social project it was once envisaged, as a recently reprinted Tribune interview with Nye Bevan shows

There have been myriad examples of this: from Matt Hancock’s recent hard-man routine, arguing that he was justified in acting unlawfully in order, ostensibly, to deliver PPE (a claim rejected by frontline health workers); to Boris Johnson’s assertion that the NHS is ‘powered by love’; to the government’s performative co-option of impromptu public clapping; to cynical attempts to render justified critiques of Serco into attacks on the NHS; through to Hancock’s attacks on Rosena Allin-Khan’s ‘tone’ for deigning to question him.

Refusing to offer NHS workers a pay rise in the Budget builds on all of this, representing a confluence of different currents of contemporary Conservative thought. The aim is to treat the state as what I would tentatively term ‘Leviathan with limits’: able to splash the cash in a seemingly limitless fashion when it comes to hiring management consultants and awarding contracts to friends and donors; but suddenly reticent and ‘fiscally responsible’—portraying a kind of performative powerlessness—when it comes to meeting social needs.

In and of itself, this phenomenon is not wholly new. As an excellent recent discussion between Owen Jones, Grace Blakeley, and Jeremy Gilbert stressed, neoliberalism should not be understood so much as a shrinking of the state as a recalibration of what needs it serves and in whose interests it works.

What is striking is the speed of the current recalibration: the transformation from relentless austerity to a rhetorically free spending party predated the pandemic, but the response to coronavirus—coupled with the media hagiography of ‘dishy Rishi’—has decidedly accelerated this process, not least in the public imaginary.

This current configuration of Conservative strategy, as James Meadway has recently explained, is politically dangerous for Labour. Capturing the political zeitgeist by increasing corporation tax—albeit to a level which would still be one of the lowest in the OECD—coupled to a far more interventionist state engaging in an infrastructural spending bonanza could well represent a successful political economic strategy for the Conservatives moving forward.

Demonstrable, ‘shovel-ready’ projects undertaken with significant private sector involvement, coupled to a few percentage points more tax taken off of corporate profits, could even represent a post-Brexit return to the kind of national capitalism with which, as David Edgerton recently showed, the Conservative Party was once preoccupied.

None of this, of course, necessitates putting more money in the pocket of workers; nor, indeed, does it necessitate rewarding materially NHS workers: the rest of the public sector, with some exceptions, has already been plunged into a period of pay restraint. Understanding this is key to understanding the moment we are in.

From a purely political perspective, the Conservative Party have navigated the coronavirus crisis with aplomb. They have been helped by an obsequious media, without question – but the fact remains that they have managed to preside over a disaster while maintaining and entrenching their own class power, and consistently retaining the support of 40 percent of the electorate.

What is striking is how little has changed in material relations over the last year. Rentiers have been protected, government largesse has been expended towards protecting and inflating asset prices—see here the touted government-backed ‘Help to Buy’ replacement, alongside the extension to the stamp duty cut—and the furlough scheme has been mediated through employers, and subsequently predicated on employment. Little has been done to address the issues around sick pay, nor has any commitment been made to keep the derisory uplift in Universal Credit.

The Conservatives have stumbled upon a potentially potent political mix: a level of intervention and investment unseen in the last decades, attempts to capture the zeitgeist through faux-populist measures such as increases in corporation tax—no doubt sweetened by a plethora of contracts from the aforementioned newly interventionist state—alongside an insistence that social needs go unmet, and po-faced references to belt-tightening intermittently reappearing when it comes to wages.

Labour—and, for that matter, the wider Left—need to strike a nuanced line in both understanding the Conservatives’ emerging project, and formulating an opposition to it. The Conservatives have rediscovered the power of the state – but as a vehicle for the class interests they represent, not a neutral force which automatically improves the lives of working people whenever the spending taps are turned back on.