Former Chancellor Sir Jeremy Hunt today accused John Healey and Andy Burnham of wasting their political capital by putting off difficult decisions, as he responded to the Budget in the House of Commons.
“Instead, I fear that the Chancellor and the Prime Minister have wasted the political capital that they have by putting off difficult decisions,” Hunt told MPs during the Budget debate.
Hunt, who was Chancellor from 2022 to 2024, set out what he described as three rules for a Budget: not upsetting the markets, doing no harm and never wasting a Budget.
On the first, he said markets were calm. On the second, he said that after two Budgets that had raised taxes, mainly on business, by £66bn, many businesses would be relieved that today’s measures amounted to a £2bn tax rise on business.
He warned that the higher Bank Surcharge, which banks will pay for 15 months from January to fund energy support, could lead to higher mortgage rates and “actually make the cost of living worse for ordinary families”. Business Matters columnist Nigel Green has also argued that the bank tax will reach households through mortgages, savings and pensions.
Missed opportunities
Hunt said the Office for Budget Responsibility forecast of 1 per cent growth next year left the economy short of the 2 per cent to 3 per cent he said was needed.
He said the Budget could have set out how to get a million young people off welfare and into work, how to bring AI into every part of the economy, and how to cut energy prices for businesses, factories and data centres over three years to levels in France, which he said were 35 per cent lower.
He also said it could have shown how defence spending would reach 3 per cent of GDP. Healey told MPs today that he would set out how the UK would meet its defence targets at next year’s Spending Review, after Burnham said on Monday that the Budget would set out a path to 3 per cent by 2030.
“The problem is these decisions are going to be harder in a year’s time than they are today,” Hunt said.
He described the government’s breathing space measures as “very welcome in their own right”, but said they would be forgotten within months, and that young people leaving school and university with debt and fewer graduate jobs were “losing hope”.
Hunt said reforming welfare, controlling public spending and bringing down energy prices were difficult for any government. “It’s not enough, I’m afraid, to say that it’s okay because we’re not the Tories,” he said, adding that 4 million jobs had been created under 14 years of Conservative government.
The government’s case
In his statement, Healey said the Budget met the fiscal rules and that the OBR had upgraded its growth forecast for this year to 1.2 per cent. He said the UK economy had been the fastest growing in the G7 alongside the US in the first half of the year, and that he had rejected broad-based tax rises or cuts to public services so that families and businesses had “breathing space”.
Healey said final reports from Alan Milburn and the Timms panel on welfare would be published next month, with the government’s response before the end of the year and legislation to follow next year.
