Spending spree could come at a heavy cost
From the briefings that have been emerging from Downing Street and the Treasury in recent weeks, it is sometimes difficult to remember which party won the last election.
Ahead of the Budget, there are reports we could be set for a spending boom to rival Gordon Brown’s pre-election giveaway in 2001 — the very height of New Labour.
It’s no wonder some Conservatives are starting to get a little antsy about the fiscal implications of Boris Johnson and Rishi Sunak’s spree, even if the politics are blindingly obvious.
Of course the Conservatives are going to spend money in parts of the country that, as the PM puts it so effectively, “loaned” his party their vote in the last election. But that doesn’t mean that all the work that David Cameron did to persuade the country that austerity was necessary can be thrown out alongside.
The great British public has an innate scepticism about massive spending programmes, as Jeremy Corbyn found out at the ballot box in December. There is a virtue in fiscal prudence that Johnson and Sunak must not forget — both for the sake of the country’s finances, and because if you allow a spending war to become the overriding narrative of British politics then the opposition will usually win eventually.
It’s in that context that eyebrows are entitled to be raised when well-sourced reports that the Treasury plans to concoct new fiscal rules or change the way its timescales appear, and similarly when it is proposed that the next boss of the government’s fiscal watchdog, the Office for Budget Responsibility, might not have quite the teeth of the incumbent.
This government has already enjoyed its honeymoon period perhaps a little too much; losing a chancellor is not considered entirely best practice just two months into an administration.
There will, of course, be plenty of people who will welcome a burst of infrastructure spending. But as a new Institute for Government report has made clear, invariably such big clumps of cash do not end up entirely where they’re supposed to.
They’re used to plug day-to-day funding gaps, and those put in charge of large construction projects tend to be wildly optimistic about their costs — with inevitable delays. Johnson and Sunak are going to loosen the purse strings, and there’s a good case for updating Britain’s in some places creaking infrastructure.
But many at home, and abroad, will want to know that somebody’s looking after the finances.
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