Labour has accused Rishi Sunak of presiding over a “smoke and mirrors” budget after he conceded that just 20% of his biggest single spending commitment unveiled before the speech is made up of new money.
The Treasury has committed to almost £26bn of spending in a rush of announcements before Wednesday’s budget and spending review. It is expected to contain no tax cuts and the chancellor has sought to reassure anxious Tory MPs that he is a fiscal Thatcherite at heart.
Following months of general equanimity among parliamentary colleagues and the public as Sunak spent billions on Covid relief, he faces a hugely tricky budget, trying to balance the worries of Tory MPs about what they see as an increasingly high-tax, high-spend government, and demands for new infrastructure.
On Sunday, Sunak conceded that of £7bn to be pledged in the budget for what could be the flagship announcement, part of the so-called levelling up agenda, just £1.5bn is actually new money.
Challenged on Sky News about the makeup of the money committed for rail, tram and bus projects outside London, Sunak accepted that most of it had already been announced, with the main news on Wednesday being where it will be spent.
Sunak said he had already announced £4.2bn for the “overall envelope for improving how people get around our big cities”, adding: “What we’ve actually done is top that up, as you said, by £1.5bn, but then crucially give out the allocations in that envelope – where all the bits are going to go.”
Of a dozen Treasury trails for budget commitments, several others are not fully new spending, or involve money used to replace earlier commitments. For example, of money announced to assist crime victims, including victims of domestic and sexual assault, just 40% is new. For a new safer streets fund, two-thirds is new. Other announcements cover the UK Shared Prosperity Fund, which replaces funding from the EU.
Rachel Reeves, Labour’s shadow chancellor, said: “We’ve seen a weekend full of Treasury smoke and mirrors ahead of the budget – with a government that would rather re-announce plans than get the work done.”
Sunak argued that in spending on families and early intervention he was not accepting that cutting Sure Start had been a mistake, arguing that work done more recently by Tory colleagues such as former business secretary Andrea Leadsom had only now demonstrated the need for such policies.
“What they show very clearly, as the evidence does, is the very early years in young families’ lives are critical and that’s where parents often struggle and that’s where actually we need to provide a little bit more attention,” Sunak told Sky.
In response, Reeves said Sunak was proposing a “pale imitation that doesn’t even take us back to where we were in 2010”.
She said: “It’s all well and good saying we’re going to invest in these family parks, but thousands of children’s centres and Sure Start centres that were proud features of our communities, particularly of our poorer communities, have long gone.”
In another interview, with the BBC, Sunak rejected a call from Marcus Rashford, the Manchester United striker and anti-poverty campaigner, to extend free school meal programmes into the school holidays for the next three years.
Sunak said that as with the furlough scheme, while such programmes were necessary during lockdown, “it’s right that we’ve transitioned to a more normal way of doing things”.
Sunak also confirmed that on Wednesday he will unveil the results of a review into business rates – but gave no sign that this could lead to a reduction in the levy. Business groups and many Tory MPs have called for a cut to boost high streets, but the Treasury appears resistant.
Writing in the Mail on Sunday, former minister David Davis castigated Sunak for his approach to taxation, and called into doubt the chancellor’s allegiance to the fiscal ideas of Margaret Thatcher.
“I knew Margaret Thatcher, so I will watch with interest whether he can match the brilliance that Thatcher, and her great Chancellor Nigel Lawson brought to government,” Davis wrote.
“Sadly, every indication so far is that his current course will take us on to the rocks – not away from them.”
Challenged about his policies on Sky, Sunak insisted he still stood for low-tax Conservatism: “Of course I do stand for that, and that’s what I would want to deliver, and that’s what my instincts are. But you also have to take a step back and think, what have I and the government had to grapple with over the past year and a half? We’ve had the biggest economic shock that we’ve experienced in 300 years.”