When Liz Truss unveiled the now infamous mini-budget, even her cabinet colleagues didn’t know what was coming. Rishi Sunak is taking no such risks.
Late last night, the Treasury issued a briefing to friendly newspapers – seen by Sky News – setting out the “eyewatering” scale of the fiscal black hole, which means “everyone” will need to pay more tax.
Following a meeting between the prime minister and Chancellor Jeremy Hunt to discuss the Autumn Statement on 17 November, they “agreed that tough decisions are needed on tax rises, as well as on spending”, the Treasury stated.
A Treasury source said: “It is going to be rough. The truth is that everybody will need to contribute more in taxes if we are to maintain public services.
“After borrowing hundreds of billions of pounds through COVID-19 and implementing massive energy bill support, we won’t be able to fill the fiscal black hole through spending cuts alone.”
They also briefed that while there will be pain all around, those with the broadest shoulders will bear the highest burden – something former chancellor George Osborne, the architect of austerity, also used to say.
It’s expected income tax thresholds will be frozen – dragging tens of thousands more people into the 20p and 40p tax rates in the coming years, and the windfall tax could be extended.
But day-to-day spending is also expected to be squeezed, with the possible exceptions of the NHS and defense, on departments already struggling with inflation.
Some in government say they expect Mr Sunak to raise benefits by inflation as promised in a signal of fairness to the most vulnerable, but no decisions have been made yet.
This is rolling the pitch – preparing the public and MPs for grim news and setting out priorities.
It allows interest groups within his party, and external groups and charities, to make their cases in advance and hopefully avoid some of the worst pitfalls.
But it’s a high-wire act – the last time spending was squeezed like this, under the austerity drive of David Cameron and George Osborne from 2010, they had years to craft a narrative around it.
This time, Rishi Sunak made clear on the steps of Downing Street that a lot of the economic damage is self-inflicted by his predecessor Liz Truss and her failure to balance the books, although borrowing to tackle COVID is a key driver too.
Many voters who turned to the Conservatives for the first time in 2019 will have heard Boris Johnson saying austerity was over, indeed that he had always thought it was “just not the right way forward for the UK”.
The PM does not have long to craft a case that it is now time for everyone to tighten their belts – and to try and ensure the balance looks fair.
Source: Skynews.com