A Budget to get Britain building
RISHI Sunak can expect to pick up a hard hat and a hi-vis vest along with his Gladstonian red briefcase on Budget Day next week. Boris Johnson has ordered his new Chancellor to use his first keynote financial statement to start diggers and bulldozers rolling across the country.
Mr Sunak has had less than a month to prepare for his debut Budget on Wednesday after being handed the stewardship of the Treasury in the aftermath of the shock resignation of Sajid Javid.
Yet like the rest of the Prime Minister’s senior team, he has long been aware that the heart of the speech will be about throwing open the spending sluices for massive investment in major infrastructure projects.
Treasury insiders say the Chancellor is determined not to let the looming health emergency overshadow his big day.
“Hopefully, the impact of coronavirus will be short-lived,” one senior Treasury source told me.
“What is important is that we lay the foundations for big infrastructure projects for the next five years. We need to get Britain building.”
A series of measures to support the economy through the expected epidemic have been prepared for in the Budget. As well as ensuring the necessary resources for the NHS, they will focus primarily on helping businesses cope with a drop in consumer demand as quarantining and home working is widespread.
BUT ministers and officials working on the Budget are understood to view warnings that the health emergency will trigger a global financial crisis on the scale of the 2008 banking crash as misplaced.
The reasonable worst-case scenarios plotted by Whitehall planners are being revised down on a daily basis as health experts find out more about the disease.
Forecasters suggest that consumer confidence will bounce back once the country emerges from the peak of the outbreak.
Both the Prime Minister and the
Chancellor do not want to be deflected from starting the building surge as early as possible in the parliamentary term.
Voters must see a real transformation in the transport network and housing stock by the next general election expected in four or five years time, they believe.
Putting the brakes on the building plans now with a cautious Budget next Wednesday, because of coronavirus, is regarded in the Treasury as a waste of a golden opportunity. Billions will be unleashed for new roads, rail links, buses and houses onWednesday.
If Mr Sunak is to err on the side of caution anywhere in his speech, it is likely to be on delivering tax cuts. His predecessor Mr Javid this week revealed that he had planned to slash the income tax basic rate from 20p to 18p and reduce stamp duty, possibly funded by hikes to council tax on larger homes and increased levies on pension savings.
However, Mr Sunak is likely to use the coronavirus threat as a pretext for delaying major tax cuts until later in the term.
Tory MPs hungry for a reduction in the tax burden now are likely to be disappointed. They will also be irritated by an expected signal of an end to the fuel duty freeze.
But senior figures in Downing Street are convinced that delaying significant tax cuts until nearer to the next election, rather than trying to make a splash in the first Budget, will reap richer electoral returns.
Mr Sunak will deliver his first Budget to a Commons currently gripped by nervousness and uncertainty at the growing health emergency. His job will be to raise some Tory cheers by reminding the party of the Government’s mission to rebuild Britain for a prosperous post-Brexit future.