Rishi Sunak has kicked off budget day with a dire warning to his cabinet colleagues that it would not be “right or responsible” for a Conservative government to ignore the scale of government borrowing caused by the Covid crisis.
Giving the cabinet a preview of his budget plans on Wednesday morning, the chancellor stressed that the cost of supporting the economy and the NHS through the pandemic had taken borrowing to levels usually only seen in wartime.
According to a readout issued by No 10, the chancellor said “we must be honest with ourselves and the country about what that has meant. We are borrowing on an extraordinary scale – equivalent only to wartime levels.”
“He said that, as a Conservative government, we know that we cannot ignore this problem and it wouldn’t be right or responsible to do so.”
With Keir Starmer – along with many economists – warning against immediate tax increases because of the risks of choking off the recovery, Sunak is keen to draw a political dividing line with Labour, portraying the opposition as irresponsible.
Starmer’s caution has alarmed some in his own party, who would like Labour to back some tax increases – on businesses that have performed well during the crisis, for example.
The chancellor is widely expected to set out a package of tax increases in Wednesday’s statement, alongside confirming that key economic support measures, including the furlough scheme, will be extended.
Some Conservative backbenchers have joined Labour in warning against tax increases, fearing they will hit businesses and consumers already struggling to emerge from the crisis.
Sunak told the cabinet that despite the deep downturn caused by shuttering many sectors of the economy for months on end, he was “optimistic” about the future, and would set out investment plans aimed at making the UK a “science superpower”.
And he claimed the government’s costly rescue measures were possible only because of “the prudence of the Conservative government over a long period of time, which meant the country had gone into the crisis with strong public finances”.
Sunak told his colleagues the budget would “begin the work of building our future economy”, by investing in skills and infrastructure, and contribute to the government’s aim of “levelling up” the UK.