Today Jeremy Hunt will stand up and tell us his plan for getting Britain out of the shit, or at least for moving the shit around so that we all get some of the smelly stuff and it doesn’t stink the exchequer up to the point that we can’t breathe.
That we are in the shit is not in doubt, the IFS says we need to make cuts or raise taxes by £60bn, the OBR may lest us off with around £55bn. Someone’s going to have the foot the bill and the pick question is whether that person is poor and economically insignificant or rich and an agent of growth. Truss and Karteng wanted the bill to be met by economic growth and that’s not going to be an option this time.
It’s good to simplify matters. That way we have a framework to think about the nuances (like pension policy – taxation – indexation et al)
The framework is pretty simple, think of tax rises hurt the rich and those who grow the economy, spending cuts hurt the poor and those whom the economy is supposed to protect. Here’s how the BBC present the framework.
The final figures will be published as the statement is delivered but it is expected that around 55% of the measures will be spending cuts and 45% will be tax rises. This is likely to equate to around £30bn in spending cuts and £24bn in tax rises.
The chancellor is likely to argue that this is not a return to the 2010 Conservative-Liberal Democrat coalition government’s policy of austerity, with the balance of spending cuts to tax rises 80% to 20% under then-Chancellor George Osborne.
This sounds one of those authorised leaks designed to position this budget for electoral purposes. The FT was explicit about this, overnight running a story that Hunt was planning a budget to help the Tories win the next election . There is a way of presenting the pain so it happens after 2024 but we live in a world of fiscal transparency, any such strategy will be quickly called by the IFS and others and rubbished by those who control the cost of Government borrowing.
This is of course the Achilles heel of any Chancellor, as I have written before, this must be a statement that gets Britain out of the shit and not just the Conservative party.
That is a tough budget to write, it’s why we didn’t get a halloween budget and it’s why what happens today , matters a lot.