View from Westminster
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Economic stagnation and resulting fiscal problems predated the pandemic and are driven by long-term failures, says Jonathan Portes, professor of economics at King's College London. In much of the discussion about the Budget, commentators, including me, have said that the cost of furlough and business support during lockdowns, and of energy price subsidy since, have worsened the public finances and require tough choices that both Conservatives and Labour are avoiding. Prof Portes rightly points out that this is only a small part of the problem. "As a matter of simple arithmetic, the pandemic and energy support schemes added maybe £400 billion to debt. That sounds a lot, but at 1 per cent real interest rates it leaves an additional fiscal hole of £4bn a year – small change. This is not what's driving our current problems."
He points instead to "underinvestment, austerity and Brexit".
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Where is the Laccadive Sea? |
Answer at the bottom of today's email |
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| Although he has previously said his 'working assumption' is an election in the second half of this year |
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| Foreign secretary says he had a 'tough but necessary' conversation with Benny Gantz, war cabinet minister |
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| BBC accused of editorialising as presenter jokes about stealth tax rises |
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What else you need to know today |
- Labour intends to pay for its NHS plans by making savings in public spending if it wins power, said Rachel Reeves, the shadow chancellor, in a holding position that will fill the gap left by Jeremy Hunt's abolition of non-dom status – presumably until closer to the election
- Labour had a good day of Budget follow-up, pointing out that the prime minister's ambition to abolish national insurance altogether would cost more than Liz Truss's disastrous mini-Budget (but Rishi Sunak and Jeremy Hunt are not planning to do it all at once)
- I wrote about Jeremy Hunt's Budget disaster: he has accidentally done the right thing by clobbering rich pensioners
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Five Budgets that left their mark on history – for good and bad |
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Sean O'Grady identifies 1981, 1992, 2007, 2012 and 2022 (Kwasi Kwarteng's mini-Budget) as momentous fiscal events... Read more |
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A look back at the week in Westminster |
Rishi Sunak and Jeremy Hunt literally double down on tax cut |
The House of Commons is not sitting tomorrow. This four-day week has been dominated by the Budget, although the leak of its main measure – a literal doubling down of another 2p-in-the-pound cut in national insurance – robbed Jeremy Hunt of his chance of a big surprise on the day. The week began with George Galloway, the victor of the Rochdale by-election, taking his seat. He was introduced by Neale Hanvey, of the Alba Party (the faintly Gallowayite breakaway from the SNP, although Galloway himself is a unionist), and Peter Bottomley, who thought it was his duty as Father of the House to welcome the four-time MP who was shunned by most members. Galloway has yet to speak in the Commons for his new constituency. He tried to "catch the speaker's eye" at Prime Minister's Questions yesterday but Lindsay Hoyle cut the session short to get on with the Budget speech. |
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"Government and opposition are joining in a conspiracy of silence in not acknowledging the scale of the choices and trade-offs that will face us after the election."
Paul Johnson, director of the Institute for Fiscal Studies |
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And finally... Eighty per cent of people over the age of 90 are not in care homes. Chris Whitty, chief medical officer for England |
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Quiz answer: Between India and Sri Lanka |
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