Chancellor Jeremy Hunt's autumn budget will reveal much about this government's priorities – Ian Swanson
After Liz Truss and Kwasi Kwarteng’s plans for a tax giveaway, prepare for tax rises and spending cuts.
It was originally timed for Halloween. But even though Jeremy Hunt's autumn budget has been delayed until Thursday it still promises to be a horror show.
The Chancellor has warned of eye-watering decisions and the prospect of everyone having to pay more taxes, alongside spending cuts. Commentators say the UK is probably already in recession. Hunt says he wants to keep any recession as short and shallow as possible, but some critics fear his expected measures could make it worse.
Instead of the £45 billion tax giveaway for the rich which Liz Truss and Kwasi Kwarteng planned less than eight weeks ago, the Tories under Rishi Sunak and Jeremy Hunt are now set to unveil tax rises for everyone, totalling up to £20 billion and around £35 billion in cuts. Measures are expected to include freezing income tax thresholds for an extra two years, more targeted help with energy costs, and no increase in budgets for government departments for the next three years, meaning deep real-terms cuts in funding for public services.
The Chancellor accompanies his talk of “difficult decisions” and “asking everyone for sacrifices" with soothing words about being “honest” and “fair”, aiming to bring down inflation as quickly as possible and prioritising those on the lowest incomes “where we can”. But it is clear the top priority is to appease the markets which reacted with such dismay to Kwarteng’s unfunded tax cuts. Sunak said the government had to be “delivering on the expectations of international markets, to make sure that our fiscal position is on a more sustainable trajectory".
There is also the suspicion that Hunt may go further with his measures than strictly necessary in the hope of being able to make tax cuts later and gain a political advantage ahead of the next election.
Labour has criticised the government’s plans, saying public services are already on their knees and “Austerity 2.0” is not the answer. Instead, Labour advocates a fairer system of taxation and says it would raise £50 billion by increasing and extending the windfall tax on oil and gas firms.
The government will stress that other countries are also in economic trouble as a result of the global rise in energy prices and the impact of the Ukraine War. But not every country has had the added problem of a government so bent on pursuing a discredited ideology that it spooked the markets by announcing unfunded tax cuts for the rich at the height of a cost-of-living crisis. No-one is suggesting Truss or Kwarteng caused the cost-of-living crisis, but their crazed experiment has certainly made it worse.
On the same day Hunt presents his budget, councillors in Edinburgh will be considering an updated report on ending poverty in the Capital by 2030. It describes how 79,000 people, including 15,000 children, in the city are living below the poverty line and how 73 per cent of low-income families in Scotland have been forced to go without essentials such as food or heating.
Tax and spending decisions are not just about economic options. They also involve political choices, which reveal the values and priorities of the government and shape the kind of country we live in.