Politics

Chancellor Rishi Sunak 'will have to raise taxes' to meet Tory spending pledges


Rookie Chancellor Rishi Sunak will be forced to hike taxes to meet Tory spending promises, experts warn today.

Mr Sunak took over at the Treasury after Sajid Javid quit in a reshuffle showdown with Boris Johnson.

The fledgling Cabinet Minister delivers his first Budget on March 11 – and analysts believe he will be left with little option but to raise taxes.

The Resolution Foundation predicted economic watchdogs would reveal an extra £8billion is available to the Government.

But the think tank said it would not be enough to cover pledges outlined by the Conservatives.

“Good news on the public finances from the Office for Budget Responsibility will still be too modest to change the big picture decisions of this Parliament. Higher spending will require higher taxes,” said Resolution Foundation economist Jack Leslie.

“The decisions taken by the Chancellor in the new Government’s first Budget will help shape the economic policy backdrop to this whole Parliament. 

“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.”


The Foundation’s pre-Budget report, published today, said the OBR is likely to downgrade its outlook for the size of the economy by around 0.5% by the end of 2022

The think tank believes total government spending will climb to 40% of GDP – higher than at any point while Mr Blair was Prime Minister.

The spending rise includes up to £100billion of extra cash for long-term infrastructure projects, and the fastest increase in day-to-day Whitehall spending since the early 2000s.

It would take total Government spending beyond £1trillion a year for the first time by 2023-24, the Foundation predicted.

Borrowing would soar from £41billion in 2018-19 to £64billion by 2021-22 – potentially angering grassroots Tories who want the party to be responsible with the UK’s finances.

David Cameron and George Osborne made slashing borrowing their biggest target during six years in Downing Street.

Reversing just half of the cuts implemented by the Conservatives since 2010 would cost about £24billion, said today’s study.

Extra spending on welfare to prevent further rises in child poverty would cost around £5billion, the Foundation added.

It comes amid reports some Treasury staff will be moved to an “economic decision-making campus” in the North as part of the Government’s aim to “level up” the country and economy.

A “significant number” of the ministry’s 1,500 posts will be transferred, according to the Sunday Times, with the Tees Valley favourite to host the centre.

A Treasury source told the paper: “The Chancellor wants to shift the gravity of economic decision away from the capital to our regions and nations — and setting up a new economic decision-making campus in the North of England will do that.

“It will be key in helping spread opportunity and prosperity to all.”





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