Rishi Sunak’s spending ‘marks a shift in Tory philosophy’ of slashing the size of the state, says key ally
A key ally of Rishi Sunak yesterday proclaimed a ‘philosophical shift’ in Conservatism as experts suggested the pandemic was not the driving factor behind the Chancellor’s huge spending.
Simon Clarke, the Chief Secretary to the Treasury, said public spending was rising because the Government believed the state had a role to play in delivering its policy priorities.
Under Mr Sunak, the size of the state and the tax burden are to rise to their highest for decades.
At times the Chancellor has appeared to suggest that the Government’s actions have been forced by the Covid pandemic, the biggest economic shock in 300 years.
Simon Clarke (right) and Rishi Sunak (left) pictured before Wednesday’s Budget
But yesterday the Institute for Fiscal Studies said that 80 per cent of the extra spending announced in Wednesday’s Budget had nothing to do with the pandemic.
The economists said the majority of the spending increase was the result of the Chancellor’s decision to increase spending on health, social care and other priorities regardless of the pandemic.
Mr Clarke outlined the change in the Tory philosophy to BBC Newsnight on Wednesday.
‘We recognise that the state has a role to play in achieving some of our policy priorities and the Chancellor was very open about the fact that this is something that is a philosophical shift, if you like, from the Cameron-Osborne,’ he said.
Asked whether the new Conservatism was ‘high spending and high taxes’, he said: ‘What we want to see is to get the economy turbo-charged, to unlock the productivity and to deliver growth more evenly across the UK.
‘That does require some upfront spending. We are not shying away from the fact we are making big, big calls in terms of the investment in our infrastructure.’
The Budget was a departure from the usual Tory doctrine of low taxes and a small state
Mr Clarke has backed the Chancellor’s pivot away from traditional Tory economic policy
Tory backbencher John Redwood said: ‘I don’t quite know what the Chief Secretary was on about because the Chancellor was very clear that Government can’t do everything. He said at the end of the Budget that we need lower taxes and a smaller state.
‘I want to see first-class healthcare and education but we also need to ensure productivity and value for money. That is why I disagree with the Government on its specific tax rises such as the national insurance rise, which is a tax on jobs.
‘I am on the Chancellor’s side: The economy needs to get back to the kind of policies to bring us faster growth. And we will get faster growth if we don’t hit people’s incomes quite so much, like we are doing with this NI rise.’
The IfS also said that if things go right, Mr Sunak could be able to cut taxes by £7billion before the next election thanks to a war chest he will have built up. On Wednesday the Chancellor said his ‘goal’ was to ‘reduce taxes’ – even though he has introduced the highest tax burden since the 1950s.