All the Bad News Jeremy Hunt Hid In his Autumn Statement
The Chancellor’s Autumn Statement will go down as one of the most dishonest political statements in living memory, writes Adam Bienkov
Rishi Sunak entered Downing Street on a promise to restore “integrity and accountability” to Government.
However, the Autumn Statement delivered by his Chancellor Jeremy Hunt this afternoon will go down as one the most dishonest in living memory.
Rather than fulfil his pledge to be “honest” about the “difficult choices” he faces, Hunt instead announced a plan to deliberately hide those choices until after voters next go to the polls.
Here is all the really bad news the Chancellor refused to tell us about today.
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No Details on Cuts until After the Next Election
At the core of Hunt’s statement are plans for big cuts to Government’s spending plans. Fifty-five per cent of the squeeze on Hunt’s fiscal plans will come from cuts to public spending, rather than from levying additional taxes.
However, rather than spell out exactly where those cuts will fall, Hunt today decided to hide those decisions until after the next general election.
In his speech, he announced plans to increase health and education budgets in the run up to the election. However, what he didn’t spell out is that this will mean significant real-terms cuts to other unprotected parts of the public sector in the coming years.
With an ageing population, rampant inflation and many public services already crumbling after a decade of austerity, that means real pain is on its way.
Hunt’s plans also imply that massive real-terms cuts to public sector wages are also coming. Yet none of this was spelled out today.
Instead, Treasury officials confirmed that details on all cuts will only come after an “efficiency review” is conducted and then will only be announced at the next Spending Review, which is currently not due until after voters next go to the polls.
Highest Taxes Since the Second World War
The rest of the squeeze will come from tax rises, with taxpayers set to lose thousands of pounds each year. According to the Office for Budget Responsibility, the overall tax burden will now rise to its highest sustained level since the Second World War.
Most of these taxes will be raised by stealth, with almost six million people being dragged into higher tax bands due to a freeze on tax thresholds.
This combination of stealth taxes and real-terms cuts to public spending, means that British people are now set for the biggest ever fall in living standards on record.
This will wipe out any improvement in living standards seen since the Conservative Government first came to power. For all the promises of a new era of prosperity under the Conservatives, this means that we will have all experienced effectively a lost decade under this Government.
A Big Tax Cut for Bank Profits
Echoing his predecessor George Osborne’s pledge that we are “all in it together”, Hunt made much today of the fact that the coming pain will be “compassionately” shared.
Not everyone will be hit equally however. Buried in the accompanying documents released alongside Hunt’s statement this afternoon was the news that the surcharge on bank profits will actually be cut from the planned 8% to 3% next year. That means more than a billion pounds in tax savings for banks every single year.
At a time when households are set for the biggest squeeze on record, Hunt’s priority appears to be protecting the balance sheets of British banks.
The Government is Refusing to Take Responsibility
It’s not just his own plans that Hunt is being dishonest about, but who is to blame for them? In his statement, Hunt blamed “global headwinds” for the current crisis and said the Conservative party would be responsible for fixing it.
“While there may be a recession made in Russia, there will be a recovery made in Britain”, he told MPs.
Yet, while “global headwinds” have contributed to the current economic mess in the UK, those headwinds have also been made massively worse by the actions taken by this Government.
As the Bank of England itself has made clear, the huge package of tax cuts included in the so-called “growth plan” announced by Liz Truss and Kwasi Kwarteng in September, led to the collapse in the value of the pound and massively increased government borrowing costs.
While some of that has been wound back since Hunt took over, the overall increase in Government borrowing costs remains the biggest factor in the current squeeze on the UK’s finances.
Hunt and Sunak’s refusal to be honest about this is a major breach of the Prime Minister’s pledge to restore “accountability” to government.
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Brexit is Killing the Economy
Also absent from Hunt’s statement was any acknowledgement of the huge negative impact Brexit has had on the UK economy. In his statement, he boasted of a “transformation” to the UK economy that would come from embracing “Brexit freedoms” which “spur investment from all over the world.”
Yet according to the Office for Budget Responsibility’s report released today, the UK’s overall intensity of trade will be cut by around 15% as a direct result of Brexit. This comes on top of their previous forecast of overall growth being hit by four per cent in the long term, due to Brexit.
The truth is that were it not for Brexit, many of the painful cuts announced today would not be happening. As the former member of the Bank of England’s Monetary Policy Committee, Michael Saunders, told Bloomberg this week: “the UK economy as a whole has been permanently damaged by Brexit.”
“If we hadn’t had Brexit, we probably wouldn’t be talking about an austerity budget this week.”
A Record of Dishonesty
Sunak’s Government has spent weeks briefing increasingly alarming details from this statement, in a transparent attempt at expectations management. Much of the pre-briefed details failed to materialise, however, with threats to axe the triple lock, and cut benefits all mysteriously vanishing by the time Hunt took to his feet.
As well as being transparent, these attempts at expectations management are also deeply dishonest and corrosive of public trust.
When he was appointed as Prime Minister last month, Rishi Sunak pledged to make restoring public trust, the hallmark of his Government.
Instead, the hallmark of today’s statement was dishonesty. Dishonesty about the pain that is coming, dishonesty about where that pain will be felt, and dishonesty about who has caused it.