Hunt looks for policing budget cuts

Chancellor’s plans for a tighter fiscal approach to public spending could present a trap for Labour

JEREMY HUNT is looking at scaling back public spending in next month’s Budget in a move that could shrink budgets for policing, border officials and prison staff by a fifth.

The Chancellor is considering reducing the amount spent each year on public services after the next election from a one per cent rise in real terms to a 0.75 per cent rise.

New analysis from the Resolution Foundation think tank estimates that this would mean a 20 per cent reduction in spending for government departments not traditionally protected from cuts.

It means the Home Office, the Ministry of Justice and the Department for Levelling Up, Housing and Communities all face deep cuts this decade if the tighter approach to spending is adopted and implemented.

Tory sources have called Mr Hunt’s spending restrictions a “Labour trap”, because Sir Keir Starmer would have to say whether he would keep the plans should he win office or promise more spending.

If Labour promises substantially more public spending – which it has avoided doing to date – it would allow the Tories to argue that it will be funded by tax rises or more borrowing.

The developments come as Mr Hunt and Rishi Sunak continue private talks about the exact make-up of the spring Budget, due to be delivered on Mar 6.

It could be the last major package of financial measures to be announced by the Government before a general election. The Tory leadership has been under sustained pressure from many Conservative MPS to announce significant tax cuts that could help change the party’s fortunes.

With less than a year before the election, widely expected to take place in the autumn, the Tories trail Labour by around 20 percentage points in the polls. Fiscal headroom – the amount of money remaining while hitting the promise to reduce debt within five years – is seen in the Treasury as critical when deciding on tax cuts.

In recent weeks, shifting economic forecasts have reduced the fiscal headroom, leading Number 11 insiders to say tax cuts have been scaled back and new spending cuts considered. But the Resolution Foundation estimated the fiscal headroom Mr Hunt has for the Spring Budget will be £23 billion, up from £13 billion last autumn.

That potentially leaves the Chancellor with a bit extra to spend on tax cuts, although Treasury insiders have been suggesting they do not expect the headroom to be that big. Richard Hughes, the chairman of the Office for Budget Responsibility, the Government’s independent economic forecaster, said the spending plan was worse than “fiction”.

It remains to be seen whether Mr Hunt will adopt the tighter spending plans, with much depending on changes to economic forecasts.