Government ‘could borrow more money than Blair’
Chancellor’s spending plans could see biggest ‘giveaway’ since 2001
THE CHANCELLOR’S Budget spending plans could see Boris Johnson borrow more cash than Tony Blair did during his decade in power, according to a report.
And Whitehall spending under the Conservatives, a party famed for being tight on the purse strings, could be set to rise to as much as £1 trillion pounds for the first time by 2023-24, say economic analysts.
The Resolution Foundation’s The trillion pound question report claims newly appointed Chancellor Rishi Sunak will use his Budget on March 11, the first since the General Election produced a Tory landslide, to boost spending. And the thinktank, run by Torsten Bell, a former adviser to Ed Miliband when he was Labour leader, said the money for extra spending was likely to require tax hikes.
The move comes as Mr Sunak is understood to be preparing to announce that parts of the Treasury will be moved to a location in the north of England. He is expected to use his first Budget to announce that a number of the 1,500 jobs at the department will be moved.
The move will be seen as a bid to show northern voters who defected to the Tories from Labour in the last general election that the Conservatives are working in their favour.
THE CHANCELLOR’S Budget could see Boris Johnson borrow more money than Tony Blair did during his decade in power, according to a report.
Whitehall spending under the Conservatives, a party famed for being tight on the purse strings, could be set to rise to as much as £1 trillion pounds for the first time by 2023-24, say economic analysts.
The Resolution Foundation’s report claims newly appointed Chancellor Rishi Sunak will use his Budget on March 11, the first since the General Election produced a Tory landslide, to boost spending.
And the think-tank, run by Torsten Bell, a former adviser to Ed Miliband when he was Labour leader, said the money for extra spending was likely to require tax rises.
According to the Foundation’s report, total Government expenditure is set to rise at the Budget to 40 per cent of Gross Domestic Product (GDP), a figure higher than at any point during New Labour’s reign under Tony Blair between 1997 and 2007.
The scheduled spending increase, which includes up to £100bn of extra capital spending and the fastest increase in day-today departmental spending since the early 2000s, would lift the Government’s total managed annual expenditure above £1 trillion within four years, it estimated.
Borrowing is also likely to rise at next month’s Budget, the report’s authors said, increasing from £41bn in 2018-19 to £64bn by 2021-22.
Resolution Foundation economist Jack Leslie said: “The Chancellor’s big-spending plans to ‘level up’ the country through infrastructure projects will lead to a bigger state than at any point under Tony Blair, and marks a big shift for a traditionally small state Conservative Party. But new roads and rail lines are only part of the story for a government wishing to turn the corner on a decade of austerity.
“If the Chancellor wants to increase spending on day-to-day public services in a fiscally responsible way he will have to change another of his party’s traditional priorities – lower taxes.
“Higher spending will require higher taxes.”
Despite predicting that the Office for Budget Responsibility (OBR) is likely to downgrade its outlook for the size of the economy by around 0.5 per cent at the end of 2022, the report suggested that Mr Sunak could still see a “modest windfall” of around £8bn.
It would give him £10bn of headroom against the Treasury target of delivering a current balance in that year.
The Foundation said its analysis, which will be published on Monday, showed lower interest rates and reduced inflation was likely to offset any OBR growth prediction downgrade.
Any extra spending would still not undo a decade of cuts though, the authors noted, with £24bn required to reverse just half of the financial reductions to nonhealth departments.
Mr Sunak was promoted to Number 11 after Sajid Javid turned down being reappointed Chancellor during the recent Cabinet reshuffle.
Mr Javid told reporters at the time that “no self-respecting Minister would accept the conditions offered by the Prime Minister”, with Mr Johnson said to have told the former Tory leadership hopeful
he must sack his advisers to continue in the job.
The Office for National Statistics (ONS) declared on Friday that Government coffers swelled by £9.8bn in January.
It was a reduction of £2.1bn compared to last January’s surplus, the ONS added.
In his first Budget, Richmond MP Mr Sunak is expected to announce a review of the business rates system amid concerns that it is penalising high street retailers.
The current system is viewed as outdated as it gives an unfair advantage to online businesses.