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29 October 2021

Latest Conservative Budget Marks Philosophy Change

With the 2021 Autumn Budget delivered yesterday, Chancellor Rishi Sunak unveiled measures which flew in the face of recent Conservative Party Budgets and revealed that the outlook for the post-pandemic United Kingdom is much brighter than first feared.

The spending plan includes provisions for the NHS and schools to cope with their recoveries from the pandemic, a host of transport projects and money to help certain parts of the country ‘level up’.

The £150bn committed by Sunak is the “largest increase this century, with spending growing by 3.8% in real terms,” he said when delivering his Budget speech at the Dispatch Box. “As a result of this Spending Review, there will be a real-terms rise in overall spending for every single department,” he said.

Treasury Secretary Simon Clarke went as far as saying that the Budget represented a major shift in Tory party philosophy, with the Conservatives traditionally seeking to cut taxes and keep spending down.

In short, some of the most notable points of the Spending Review included £8.7bn for the devolved parliaments of Scotland, Wales and Northern Ireland, a £1.7bn Levelling Up Fund to be invested in local areas across the UK, £6bn to help combat NHS backlogs as a result of the pandemic, £7bn for transport projects in areas including Greater Manchester, the West Midlands and South Yorkshire, and an extra £4.7bn for schools by 2024-25.

Speaking to BBC Newsnight, Mr Clarke said “The Chancellor was very open about the fact that this is something of a philosophical shift. What we want to see is to get the economy turbocharged, unlock productivity, and to deliver growth more evenly across the UK. That does require some upfront spending.”

With the Institute for Fiscal Studies suggesting that Sunak’s spending plan is more aligned with those of the Labour Governments of the early 2000s, the Chancellor has sought to put the minds of his colleagues at ease by saying that the party has not abandoned its core economic policies.

“Taxes are rising to their highest level as a percentage of GDP since the 1950s – I don’t like it, but I cannot apologise for it,” he said in his speech. “It is the result of the unprecedented crisis.”

“Do we want to live in a country where the response to every question is ‘what is the Government going to do about it,” he continued, “or do we choose to recognise that the Government has limits, that Government should have limits.”

While the Budget also included a freeze on fuel duty, a 5% cut to Corporation Tax for banks to remain competitive, an extra £2.2bn for courts, policing and probation services, more money for industrial research and development and changes to air passenger duty and taxes,  Shadow Chancellor Rachel Reeves was critical of the plan, stating that a Chancellor has never asked the British people to “pay so much for so little.

“Families struggling with a cost-of-living crisis, businesses hit by a supply chain crisis, those who rely on our schools and hospitals and our police – they won’t recognise the world the Chancellor is describing,” she added.

Although reaction to the Autumn 2021 Budget will continue for days, the fallout could last for considerably longer.
Latest Conservative Budget Marks Philosophy Change
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