Rishi sunak

There is no getting around the fact that these are awkward times for fiscal conservatives, such as myself. It has never been harder to make the case for lower taxes. We have the largest national debt for half a century as we come out of the worst recession for three hundred years, with zero political appetite for public spending cuts. It is essential – for both the Conservative party’s political prospects and the country’s economic prospects – that the UK retain our reputation for sound finance. This is why the Treasury Select Committee have been gathering evidence on the options for tax after coronavirus, with our recommendations to be published tomorrow. One thing is clear: there are no easy options for the Chancellor in his budget this Wednesday.

We already know much of what will be in Rishi Sunak’s Budget next week. Another £30bn for Covid-relief measures: furlough scheme into the summer, stamp duty holiday and the uplift in universal credit (which is also expected to be time-limited, despite pressure from the opposition to make a permanent adjustment). But this year’s spending splurges are becoming a footnote in a Budget dominated by the prospect of tax rises, for which the Chancellor is already receiving backlash from the left and right. Rumours of a corporation tax hike, circling for a week now, have not been denied. There’s also talk of capital gains tax coming under the Treasury’s spotlight, with some saying that Sunak aims to align it with income tax.

How will Rishi Sunak's Budget land with Tory MPs? As reports circulate in the press that the Chancellor is considering raising corporation tax and capital gains tax as well as bringing in a stealth tax for pensioner savings, nerves are growing among Conservative politicians.  The Northern Research Group of MPs, chaired by Johnson's old friend Jake Berry, have called on Sunak not to tax his way out of pandemic debt by raising business taxes in the budget. Tory MPs such as David Davis have warned they could refuse to vote for it if the reports are true. So who will Sunak listen to? Meanwhile, former prime minister David Cameron has popped up to say tax rises 'wouldn’t make any sense at all', comparing the Covid crisis to a wartime situation.

Keir Starmer’s speech on economic recovery, delivered at Labour’s Southside HQ on Thursday, was hyped as one of the most pivotal moments of his leadership so far. A Labour insider told Politico it had been 'six months in the making with a huge amount of work going into it’. It was designed to establish a clear ‘fork in the road’ between the Conservatives’ and Labour’s economic visions, both in the short term — leading up to the Budget next month — but also in the future, as Starmer pledged to shape the economy ‘to look utterly unlike the past’. But for a speech that was supposedly months in the making, there was surprisingly little substance.

Oh dear. Rishi Sunak is the subject of criticism from lockdown supporters everywhere this morning over a Telegraph front page detailing the Chancellor's apparent concerns that scientists are moving the goal posts on when lockdown ought to end. Treasury sources are keen to play down the report – but the aspect that has Mr S's interest isn't so much the contents but one MP's response to the news, Step forward Johnny Mercer. The defence minister was quick to 'like' a tweet by commentator Dan Hodges suggesting Sunak 'needs to get back in his box and stay focussed on the economics'. While everyone is allowed the occasional accidental like on social media, this appears to fit into a pattern.

The pandemic may still be in full swing but that hasn't stopped the SNP opting to push the case for an independence referendum sooner rather than later. Nicola Sturgeon claimed over the weekend that should the SNP win a majority (as expected) in the Scottish parliament elections, she will hold an advisory referendum on independence, whether or not Boris Johnson consents to the move.  Not everyone in government is convinced the First Minister would go ahead with this should push come to shove. But the fact it's even on the table points to the problem Johnson has on Scottish independence – his insistence that now is not the time for a second border poll will not be enough to make the issue go away. So, what will?

Today's papers are splashed with good news on the pace of the vaccine rollout, with over-70s now being invited for a jab. However, the issue currently causing angst in the Tory party is universal credit. Last week, Labour attacked the government over free school meals, today they will put the government under pressure over the universal credit uplift. At the start of the pandemic in April last year, Rishi Sunak increased the payment by £20 a week.  The issue of whether that increase will continue will be discussed at opposition day debate this evening. Boris Johnson is being urged to extend the benefit increase beyond 31 March when it is currently set to come to an end. This is an idea that has won support with many Tory MPs.

Rishi Sunak’s latest giveaway totals £4.6 billion in grants for the retail, hospitality and leisure sectors, amounting to up to £9,000 per outlet. Alongside this comes an additional £1.1 billion for local authorities and a £600 million discretionary fund for businesses that might not qualify for the main grant. This money is meant to help businesses with their fixed costs problem: having to pay rent, utilities and upkeep despite bringing in far less income (in some cases, no income at all). The largest cost for most business owners — payroll — was addressed in December when the Chancellor extended the furlough scheme to the end of April.

Last week, Katy Balls and I interviewed Rishi Sunak for the Christmas issue of The Spectator (out today) and his comments on debt have caused some interest in today’s newspapers. As ever with such interviews, there’s only so much you can squeeze into two pages but I thought it worth elaborating on his position today. I suspect it will come to define the political debate next year: yes, 2020 was a year of almighty splurge. Sunak has borrowed more in ten months than Gordon Brown did in ten years: but there was a pandemic. The question is how you get that back to normal. For a surprising number of Tories, it’s a question of 'whether' you get it back to normal. Why not let debt rip? Let it go from today’s 100 per cent of GDP to 120 per cent or even 150 per cent?

I wonder how much more money we will have to bung the teachers in order to inculcate within them an amenability towards doing a spot of teaching? They still seem terribly averse to the whole idea. During the first lockdown, 60 per cent of young children received no virtual lessons at all from teaching staff, and one in five pupils over 12 was given no work to do, according to the Children’s Commissioner. Virtual lessons shouldn’t have been terribly difficult to arrange, but most of the time there were none. My own daughter had no virtual lessons from March to July (which is why she’s no longer in the state sector). She did, however, complete five physics papers and, being scatty, sent them — one after the other — to the wrong email address. Nobody noticed.

The proposed reduction in international aid from 0.7 to 0.5 per cent of GDP has elicited a furious reaction from some quarters. It has been condemned by five former prime ministers, three of whom never met the target when they were in office. What is missing from this debate is the historical context. The rise in development spending was part of the peace dividend that followed the end of the cold war. But the just-concluded defence spending settlement marks a UK recognition that this peace dividend is over — great power competition is back and this country’s military spending now needs to increase. Over the next decade or so, military spend is likely heading back to the level it was when the Berlin Wall fell.