Chancellor to focus budget on post-COVID rebuild – here’s what you should expect
When Rishi Sunak stands up to deliver his budget and three-year spending review on Wednesday it will be his first real opportunity to set the tenor of his chancellorship unencumbered from the immediate crisis of COVID – although the fall-out of this pandemic will undoubtedly loom large.
It will make a change for a chancellor who has spent his first 20 months in office embroiled in the biggest public health crisis seen in a century, which in turn triggered an economic crisis that has left the public debt – borrowing accumulated over time – at about 95% of GDP, the highest level in more than 50 years.
Having guided the country through the past 18 months, spending hundreds of billions to prop up public services, people’s pay packets, and businesses, the chancellor is now focused on the post-pandemic rebuild.
Please use Chrome browser for a more accessible video player
What can we expect from the budget?
On Wednesday, Mr Sunak will set out on that journey in his first-ever joint budget and Spending Review, in which he will set the ‘spending envelope’ – how much total government spending will be over the next three years – as he divides up funds between different departments.
‘Highly unlikely’ to see further tax rises
A big set piece event, government ministers and economists are not expecting a big tax and spend budget, those decisions have already been taken: Prime Minister Boris Johnson has only just announced a manifesto-busting £12bn hike in national insurance to fund the NHS and social care, while Mr Sunak lifted corporation tax and the freezing of personal allowances in the March budget.
“This is the third big fiscal event of the year. We’ve already had a budget and huge tax rises, so it’s highly unlikely we’ll see the raising of any taxes,” said Paul Johnson of the Institute of Fiscal Studies.
“We don’t expect to see a cut in spending, but a lot of departments will still have less to spend, not least because spending on the NHS keeps taking a big slice of pie.”
Government insiders say all departments will see an increase in their day-to-day budgets in real terms, but eyes will be on how unprotected areas of government – the Ministry of Justice, the Home Office, local government – fare in terms of their spending settlements, given that more than 40% of spending overall is now funnelled into the NHS and social care.
But if this is not to be a headline-grabbing budget, allies hope it will be the moment in which this war-footing chancellor finally gets to show his peacetime approach to the job is reforming and fiscally responsible.
Mr Sunak cites Nigel Lawson – the Thatcher-era chancellor who reduced the top rate of income tax from 83% to 40% – as the predecessor from whom he draws inspiration.
“He doesn’t want to be driven just by events,” says one ally.
“He wants to be a reformer and come out of this crisis with fresh eyes about how the Treasury might do things better.”
Business rate reform on the back-burner
To that end, the chancellor is expected to announce a simplification of alcohol duties in this budget, halving the 15 different bands of duties to simplify taxes.
It will be billed as totemic of Mr Sunak’s desire to reform and simplify the tax system as well as a post-Brexit opportunity – the UK can do this because it’s no longer bound by EU directives on alcohol taxation.
The reform of business rates has been put on the back burner
What he won’t do this time around however is reform business rates, delaying again the fundamental overhaul of the system promised in the Conservative Party’s 2019 manifesto and followed up by a review in Spring 2020.
Allies say Mr Sunak does want to reform the system, and level up between bricks and mortar businesses and virtual ones – he is considering whether to introduce an online sales tax – but has decided to push business rates reforms into next year.
One ally said the reality is that the chancellor hasn’t had the time to do the work on what is a policy-dense and politically fiddly policy area. It will no doubt disappoint businesses, and the chancellor’s ability to overhaul the system before the next election will become a test of how much of a reforming chancellor he really is.
Mr Sunak will also use the budget to build on his conference speech as he stresses again the need for fiscal responsibility – his slogan for the speech will be along the lines of ‘responsible choices for a stronger economy’.
Reining in government borrowing
The chancellor has set current spending plans around an ambition to stop borrowing to fund day-to-day spending within three years, and the expectation is that he could use the budget to set out formal rules to rein in government borrowing in order to demonstrate fiscal discipline ahead of the next election.
But this budget is more than just an opportunity for Mr Sunak to signal he is both a reformer and fiscally disciplined, he will also use this moment to reiterate the prime minister’s amorphous levelling-up agenda.
England’s city regions will receive £7bn for transport improvements as the chancellor looks to improve services for those living in Greater Manchester, the West Midlands and South Yorkshire.
Decisions on the future of the High Speed 2 rail line from London to northern England and an upgrade of the trans-Pennine line from Leeds to Manchester (dubbed HS3) will be made after the budget, when the Integrated Rail Plan is announced.
Please use Chrome browser for a more accessible video player
Is there going to be HS2 extension into Leeds?
The chancellor is also expected to announce a standard annual rise for the minimum wage in the budget, pushing it closer to £10, from £8.91 an hour for over-23s (the National Living Wage). In 2019, the former chancellor Sajid Javid promised to lift the minimum wage to £10.50 an hour for over-21s by 2024.
COVID still looms large
If you asked the chancellor what most worried him about the coming months, I suspect COVID would inevitably loom large.
The risk of a new COVID variant could put the country, and the economy, back on its heels – and even if the gloomiest scenario doesn’t come to pass, what is more certain is that this chancellor is living with uncertainty.
The aftermath of the COVID-19 crisis will still loom large
Supply chain shortages, inflation, rising prices, and the possibility of rising interest rates: it is a fiendishly complicated and volatile landscape upon which to build a post-COVID recovery.
While the prime minister told Sky News last month that fears over inflation have proved “unfounded”, it is thought that the chancellor and other cabinet ministers are very worried about inflationary pressure and the knock-on effect it could have on the cost of living, interest rates and public finances, as a 1% interest rate rise increases government debt repayments by £21bn a year – equivalent to the entire defence budget.
“It’s unpredictable at the moment,” says the IFS’s Paul Johnson.
“The fiscal outlook is so dependent on what the OBR forecast the economy will be in three years time, but determining what he’s got to spend because of fiscal rules, comes with huge uncertainty.
Follow the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker.
“Even ignoring COVID we don’t really understand where the economy is at the moment. And in addition, we don’t know whether COVID will peter out or cause more problems, so he is fighting in fog.”
A chance then this week for the chancellor to set out the principles that will guide him. But the path ahead is still too hard to tread with any confidence.
Politics
Mark Menzies: Tory activist who reported MP over alleged misuse of funds disappointed by party response
A Tory activist who reported an MP over claims he misused party funds has told Sky News she is disappointed by the way her complaint has been handled.
Mark Menzies voluntarily quit the Conservative parliamentary party this week after a report in The Times claimed he called his ex-campaign manager Katie Fieldhouse, 78, early one day to say he was locked in a flat by “bad people” and needed £5,000 as a matter of “life and death”.
The sum, which rose to £6,500, was eventually paid by his office manager from her personal bank account and subsequently reimbursed from funds raised from donors in an account named Fylde Westminster Group, the newspaper said.
Politics live: Sunak accused of ‘full on assault on disabled people’ after welfare speech
But despite the incident taking place in December – and Ms Fieldhouse submitting her complaint in January – the Fylde MP had remained part of the parliamentary party and as a trade envoy for the government until the press reports surfaced.
He has now lost the Conservative whip and was suspended as one of Rishi Sunak’s envoys.
Mr Menzies strongly disputes the claims, which also include accusations he used campaign funds to pay his personal medical bills.
Speaking to Sky News’ Frazer Maude, Ms Fieldhouse said: “I am feeling dreadful because I am a devout Tory and as I have said to everybody else, I reported his actions to the chief whip… it is now the middle of April.
“Come to your own conclusions [about] what is happening.”
Asked if she was disappointed with the way the complaint was being handled, she said: “Yes.”
And asked if Mr Menzies should step down, she added: “It is for his conscience and the party to deal with. I have put my faith in the party, it is for them to deal with it.”
Keep up with all the latest news from the UK and around the world by following Sky News
Mr Sunak was also asked by reporters on Friday whether his former colleague should quit the Commons, and why it had taken until now for the party to act, but he said he would not comment while an investigation was being carried out.
Instead, the prime minister said: “It’s right that Mark Menzies has resigned the Conservative whip. He’s been suspended from his position as a trade envoy whilst the investigations into those allegations continue.
“For our part, I can’t comment on an ongoing investigation while it’s happening and he’s no longer a Conservative MP.”
Meanwhile, the Labour Party has written to Lancashire Police to demand an investigation into allegations of fraud and misconduct in public office.
Leader Sir Keir Starmer told broadcasters that the Conservatives “seem to have sat on their hands” over the allegations.
He added: “If they thought they could sweep this under the carpet somehow they were obviously very mistaken and that is why I think there are very serious questions now that need to be answered – not just by the individual but also by the government on this.”
And the Liberal Democrats have called for the ministerial ethics adviser to investigate chief whip Simon Hart’s handling of the complaint.
Rishi Sunak is facing a fresh headache after a Conservative MP was suspended over allegations he misused campaign funds.
The Times newspaper report into Mark Menzies is the latest sleaze row to rock the Tories since the prime minister entered Downing Street with a promise to bring “integrity and accountability” to government.
Having sought to draw a line under the scandal-hit era of Boris Johnson, problems have continued to mount for Mr Sunak.
Sky News looks at the MPs who have been suspended during his time in office so far.
Mark Menzies
Fylde MP Mr Menzies lost the Conservative whip and was suspended as one of Rishi Sunak’s trade envoys after The Times published claims that he had used political donations to cover medical expenses and pay off “bad people” who had locked him in a flat and demanded thousands of pounds for his release.
Mr Menzies, who will now sit as an independent MP, disputes the allegations but “agreed to relinquish the Conservative whip, pending the outcome of an investigation”, Chief Whip Simon Hart said.
Mark Menzies. Pic: AP
Mr Sunak is facing questions over how the claims were handled, with reports suggesting that the party had been aware of the allegations for more than three months.
Sky News understands there had been an ongoing investigation by Conservative Campaign Headquarters into Mr Menzies, but further information came to light following the newspaper’s report and Mr Hart acted immediately.
William Wragg
William Wragg, the MP for Hazel Grove in Greater Manchester, also gave up the whip after he admitted to The Times he had given his colleagues’ phone numbers to someone he met on a dating app.
The senior backbencher apologised and said the person “had compromising things on me. They wouldn’t leave me alone”.
William Wragg. Pic: PA/UK Parliament
Please use Chrome browser for a more accessible video player
Wragg praised for dignity
Scotland Yard later said it is investigating reports of the so-called “honeytrap” scam after it was suggested at least 12 men in political circles received unsolicited messages, raising security concerns.
Mr Wragg’s decision to voluntarily give up the whip led to criticism from within Conservative ranks, with a senior Tory source telling Sky News: “Rishi is so weak Wragg decided he’d have to fire himself instead.”
Lee Anderson
Lee Anderson has since defected to Reform UK. Pic: Reuters
Former deputy party chairman Lee Anderson had the whip suspended over “Islamophobic” comments he made about Sadiq Khan.
The MP for Ashfield, who has since defected to the Reform party, said he believed “Islamists” had “got control” of the Mayor of London, saying: “He’s actually given our capital city away to his mates.”
A day later Mr Khan accused the prime minister of being “complicit” in racism for failing to condemn Mr Anderson‘s comments that “pour fuel on the fire of anti-Muslim hatred”.
Please use Chrome browser for a more accessible video player
Lee Anderson says Reform Party will be ‘a major force’
Mr Anderson was ultimately suspended, with the chief whip Mr Hart saying this was due to his “failure to apologise”.
Mr Anderson said at the time that he “fully” accepts the party had to suspend him – adding that he “will continue to support the government’s efforts to call out extremism in all its forms – be that antisemitism or Islamophobia”.
Scott Benton
Scott Benton was suspended last April after suggesting to undercover reporters at The Times that he would be willing to break lobbying rules for money.
A subsequent parliamentary investigation found he had committed a “very serious breach” of the rules and recommended he be suspended from the Commons for 35 days, a punishment backed by MPs.
Former Tory MP Scott Benton. Pic: PA
Mr Benton resigned before that could happen, triggering a by-election in his Blackpool South constituency which will coincide with next month’s local elections.
He had denied wrongdoing and appealed the suspension but the ruling was upheld. Had he not resigned, he would have faced being removed from his seat via a re-call petition which would have triggered a by-election if 10% of eligible voters in the area backed it.
Bob Stewart
Bob Stewart, who represents Beckenham in southeast London, surrendered the party whip after he was found guilty of a racially-aggravated public order offence.
MP Bob Stewart. Pic: PA
The conviction was quashed on appeal in February, but he has not had the whip restored.
Mr Stewart was convicted after telling Bahraini refugee Sayed Ahmed Alwadaei to “go back to Bahrain” during the incident in December 2022.
In overturning the decision, Mr Justice Bennathan said that while the words amounted to abuse, it was not believed that they caused Mr Alwadaei harassment, alarm or distress.
Crispin Blunt
Former minister Crispin Blunt had the whip suspended pending the outcome of the police investigation into allegations of rape and possession of controlled substances, which he denies.
Crispin Blunt identified himself as an MP who was arrested last October
The Reigate MP announced his arrest in October, calling it “unnecessary” but saying he was ready to co-operate and “I am confident will end without charge”.
Mr Blunt has said he does not intend to contest the next election. In January he was re-bailed until April.
Peter Bone
Peter Bone was removed in a recall petition
Disgraced ex-Tory MP Peter Bone lost his seat after being removed by constituents in a recall petition. The move came after he was suspended as an MP over bullying and sexual misconduct claims, which he denies.
Mr Bone’s partner was chosen to run as his replacement in the subsequent Wellingborough by-election. Labour managed to achieve a swing of 28.5% – the largest swing of this parliament at the time.
Chris Pincher
The Chris Pincher allegations led to the downfall of Boris Johnson
Former deputy chief whip Chris Pincher quit parliament in disgrace after losing his appeal against a suspension from the Commons following groping allegations made in June 2022.
The allegations ultimately led to the downfall of Boris Johnson, after it emerged the then prime minister was aware of an investigation into his conduct three years before, yet still appointed him to a role in his government involving MPs’ welfare.
Mr Pincher did not appeal against the rule breach, but argued to the Independent Expert Panel (IEP) that the punishment was disproportionate.
Labour won the Tamworth by-election. Pic: PA
His resignation triggered a by-election in his seat in Tamworth in October, which the Tories lost to Labour.
Keep up with all the latest news from the UK and around the world by following Sky News
David Warburton
David Warburton stood down from his seat in Somerton and Frome last summer while being investigated for claims of sexual misconduct. Mr Warburton, who was suspended over the allegations 14 months earlier, denied making unwanted advances but did admit to drug use.
David Warburton, the former MP for Somerton and Frome
In his resignation letter he said he had been denied a fair hearing by the Independent Complaints and Grievance Scheme (ICGS) and prevented from “speaking out” while it investigated the accusations.
An independent panel later found the investigation into claims he sexually harassed someone was “materially flawed“, but said it had made “no findings on the substance of the complaint against the respondent, or the allegation that the complaint was fabricated”.
Julian Knight
Julian Knight. Pic: PA
Juian Knight was suspended as a Conservative after a serious sexual assault allegation was made against him.
The MP for Solihull has always maintained his innocence and in April last year, the Metropolitan Police dropped the investigation without questioning him.
But he remained suspended from the Tory party as the chief whip said “further complaints” had been made against him.
Mr Knight announced he would be standing down at the next election as a result.
Andrew Bridgen
Mr Bridgen was kicked out of the Conservative Party last year after comparing COVID vaccines to the Holocaust.
Andrew Bridgen was expelled over COVID vaccine comments
The North West Leicestershire MP claimed a “consultant cardiologist” told him COVID jabs were “causing serious harms”, adding that the vaccine programme was “the biggest crime against humanity since the Holocaust”.
He stood by his comments following his expulsion, saying he would use his “newfound freedom” as an independent MP “to fight for justice for all those harmed, injured and bereaved due to governmental incompetence”.
Matt Hancock
Former health secretary Matt Hancock
Matt Hancock resigned as health secretary in disgrace during the pandemic when he was caught having an affair with his aide and now girlfriend, Gina Coladangelo, in breach of his own social distancing rules.
But it was his appearance on reality TV show I’m a Celebrity… Get Me Out of Here! that caused him to lose the whip.
Mr Hancock was heavily criticised by MPs, including Mr Sunak, who said MPs should spend their time “serving constituents”.
Politics
Nicola Sturgeon admits to ‘incredibly difficult time’ after husband charged in embezzlement probe
Nicola Sturgeon has described her personal situation as “incredibly difficult” after her husband was charged in connection with the embezzlement of SNP funds.
Peter Murrell, who was chief executive of the party until March 2023, was rearrested on Thursday amid a long-running Police Scotland investigation into the SNP’s finances, dubbed Operation Branchform.
The 59-year-old remained in police custody until he was charged just after 6.30pm last night.
He was later released from custody, with a report set to be sent to the Crown Office and Procurator Fiscal Service in due course.
Politics live:
Sunak accused of ‘full-on assault on disabled people’
Please use Chrome browser for a more accessible video player
Murrell returns home after being charged
Speaking to reporters outside her home in Glasgow for the first time since the charge, Ms Sturgeon – the former first minister of Scotland and ex-SNP leader – said there was “absolutely nothing I can say given the circumstances”.
But asked by Sky News’ Connor Gillies how difficult it was for her personally, she replied: “It is incredibly difficult, but that’s not the main issue here. So I can’t say anymore, I’m not going to say anymore.”
Humza Yousaf, Ms Sturgeon’s successor as leader of the SNP, said: “These are serious, serious developments. And as per the police statement, we now know that an individual has been charged, Peter has been charged, [with] the allegation of embezzlement from party funds, and that’s a really serious matter indeed.
“Many people in the SNP, right across Scottish politics, will be shocked by the news and this is an ongoing investigation.
“Police, the Crown have a job to do, just as I have a job to do as first minister.”
Nicola Sturgeon and Peter Murrell. Pic: Getty
Keep up with all the latest news from the UK and around the world by following Sky News
Ms Sturgeon, who stood down as first minister last year, has been married to Mr Murrell since 2010.
An SNP spokesperson said: “While this development will come as a shock, the police investigation remains ongoing and it would, therefore, be inappropriate to make any comment.”
-
Sports1 year ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Environment11 months agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports6 months agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Technology3 years ago
Game consoles were once banned in China. Now Chinese developers want a slice of the $49 billion pie
-
Politics2 years ago
Have the last few wobbly weeks seen a turning point for Johnson as PM?