Morning Call: What will be in the Budget?
And more importantly, how will Labour respond?
Good morning. Walking to the House of Commons to deliver the Budget in 1947, Chancellor Hugh Dalton told a Star journalist the details of what he was going to announce. The news was in the evening edition before Dalton had finished delivering it. Aghast at the indiscretion, he resigned the following day.
There is little risk of that happening to Jeremy Hunt. We have known the broad outline of today’s Budget for weeks. The Times reports confidently that Hunt will cut National Insurance by 2p. Some thoughts below.
Then for our paid-tier subscribers, Andrew Marr writes on Labour’s plan to meet Rishi Sunak’s challenge on extremists; I ask whether GB News and Talk TV can survive; and Ben analyses who the public trusts on the economy. You can read all that by clicking this button:
“The election campaign starts tomorrow,” one Labour source put it to me yesterday. Westminster chatter over polling day is frenetic, even if the atmosphere in parliament is empty. Could a post-Budget polling boost encourage No 10 to call an election? There have been so many attempts (and failures) to shift the dial of popular opinion that it is hard to see how another 2p cut in National Insurance will make a difference when it didn’t work in the autumn, and taxes are increasing overall.
The move will infuriate Labour, though. The cuts are expected to be funded by spending reductions after the election and rising taxes (probably on vapes and non-domiciled income). A Labour government would have to decide whether to impose those spending cuts or find more money to fill the gap. And a tax rise on non-doms blows a hole in Labour’s plans (which I wrote about last week). All the policies Labour planned to fund with the non-dom policy – of which there are many – will now need to be paid for in another way. That is because the money is being spent on a tax cut that Labour does not want to reverse. “We need to keep our heads tomorrow, pause, and work out where we will find the money,” was how one shadow cabinet minister put it to me.
On a micro scale, this could re-inject some ideological disagreement into politics. Labour’s Wes Streeting made an interesting point on Andrew’s LBC show last night. He said he looked forward to explaining to constituents that the government did not plan to spend the money on extra MRI scanners and more nurses. “We will have to look at other ways of funding those pledges,” he said.
Well here is a divide: the government uses extra money to reduce the tax burden, while Labour wants to put it into public services. A key question is whether Rachel Reeves cleaves close to the government, or lays out this difference in her response to the Budget. It could feel like the Truss days again.
Or, at least, it would if the money involved wasn’t so small relative to the government’s overall budgets. Throughout today, remember that the average Office for Budget Responsibility (OBR) forecasting error for the national debt over a five-year period is £415bn, according to Sky’s Ed Conway. That means the Chancellor’s announcements today are shaped by numbers that will probably have little relation to reality in a few years’ time.
Enjoy the Budget. Watch Reeves’s response carefully. Read the OBR report on the details closely. And remember, an election is looming above Tory MPs like a giant P45 blimp.
Freddie’s picks
Birmingham council imposes crippling cuts today. The social fabric is fraying. Public services do not deliver. Anoosh brings it all together in this week’s excellent cover story on Bust Britain.
Jill Filipovic looks at the consequences of Alabama’s decision that frozen embryos are people.
“I reached the heart of Caffè Concerto’s domain: five branches in the 600 metres from Green Park to Shaftesbury Avenue, like a rash across the belly of Soho.” This is an entertaining romp through London’s kitsch cafe chain, Caffè Concerto, by Josiah Gogarty.
“The Budget is for ordinary people – the mega-rich look on and laugh,” former banker Gary Stevenson argues in the Guardian.
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Rishi Sunak’s paranoid talk of “extremists” is dangerous for us all
Election year has become like a thick glass we must all squint through, a mutually agreed distortion turning everything weird and wonky. Through the glass, the Budget appears only about the size of an election bribe. And Britain’s response to the Gaza disaster becomes a “wedge issue” as excitable Conservatives talk of rising militancy, a new “enemy within”, and the possibility of a snap spring poll.
This distorting prism takes genuine disagreements and exaggerates them until they become barely recognisable. It suggests that, regardless of who wins the general election, Britain is doomed by the mid-2020s to catastrophic further reductions in the public realm – in health, education, local government and defence.
More imminently, it takes serious intellectual arguments about the validity of the term “Islamophobia” and the balance between security and the right to protest, and turns them into a party-political firefight.
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