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The day after a fiscal event – which is what Rishi Sunak’s statement on Thursday amounted to – is a little like the second day of Rosh Hashanah, the Jewish new year.
Most people aren’t aware there was a first day, and only the choir (or in this regrettable analogy, the Institute for Fiscal Studies and a few others) show up. But the second day is also when you hear the best gossip.
For example, you may have noticed some discrepancies in reporting around just how much the Chancellor spent yesterday. Was it £15bn or £21bn? Sure, total UK Government spending in 2021-22 topped £1 trillion, but £6bn is, to use a technical term from my Treasury days, a very large amount of money.
The reason, as revealed by Ben Riley-Smith of the Telegraph, is that the Treasury costed the additional £200 of the £400 off energy bills but neglected to include the cost of the original £200 which was a loan but is now part of the £400 grant and therefore will not be recouped by the Government.
HMT’s explanation was it did not want to leave itself open to the accusation of over-claiming (there is a first time for everything) but that still seems odd, given the change in status of that £200 from a loan to a grant.
If nothing else, the £6bn discrepancy serves as a reminder that spending commitments of this magnitude, however welcome, really should take place at fiscal events (like the one we had all of two months ago). Budgets and Spring Statements come with heavily detailed costing documents, notably the Red Book, while the Office for Budget Responsibility does its thing.
Finally, because it is a Friday – and a sunny one at that – I appreciate I’m pushing my luck, but I can’t help but notice Sunak is already under pressure to deliver a new package of support for next year. He may well have to. But this doesn’t speak brilliantly of how our economy is working for a great many people.
A couple of years ago, a survey by YouGov and the housing charity Shelter found that a little under half of working people in England living in privately rented homes would be unable to pay their rent for more than a month if they lost their job. That was before Covid hit, fuel bills soared and inflation spiked.
I appreciate saying ‘do economic growth’ or ‘boost productivity’ as if no one had thought of the idea before isn’t especially helpful. But the reality is we need to do it. The majority of the funding for yesterday’s spending commitments isn’t coming from the windfall tax on the oil and gas companies. It’s coming from additional borrowing.
Thursday’s announcements were absolutely critical but also evidence of two things. First, that more resilient and dynamic economy (some onshore wind would help too.) But also the need for a stronger social safety net, one that means the Chancellor isn’t forced to come to the House between fiscal events to hand out emergency cash.
In the comment pages, Emily Sheffield says our labour market is in chaos but all we can think about is partygate. She also knows from experience what Downing Street is like. While Simon English calls Sunak the cheque book Chancellor who can’t say no.
And finally, when Britain made its case to the International Olympic Committee to host the 2012 Games (that Heather Small song, Proud, will forever send goosebumps down my spine), our pitch was all about legacy – sporting, economic and environmental. We said less about building an ABBA arena for a virtual concert, or Abbatars.
But David Smyth went along and was blown away. “The future of live music” he calls it in a five-star review. Now, that would be some legacy.
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