The Prime Minister wants to use his budget to fight Labor ahead of the 2024 general election. Photo: Jacob King – WPA Pool/Getty Images
The Conservatives plan to use the Budget to cheat Sir Keir Starmer out of borrowing in an attempt to show that Britain would fall further into debt under Labour.
Rishi Sunak wants to take on debt. Fight opposition in the 2024 election by creating a new dividing line between spending and borrowing, The Telegraph reports. Government sources have indicated they want to frame a vote for Labor as a vote for more borrowing. .
Downing Street officials are considering tightening the borrowing regime in the government's fiscal rules in an attempt to “coax” Sir Keir off the issue. Sources suggested it would put political and media pressure on the Labor leader to explain how he would fund his policies within the rules.
Government insiders believe the move would deliver a “sting.” in the tail”, which will expose Labor. spending plans such as a £28 billion pledge to achieve net zero.
In an attempt to set the 2024 agenda (which Mr Sunak has confirmed will happen during the general election), the Prime Minister used his New Year message to commit to “cutting the debt” as well as “cutting taxes”.< /p>
This follows days of feverish speculation about what's to come in the budget on March 6.
In his message, Mr Sunak said his New Year's resolution was to “keep moving forward”. forward” following the announcement of tax cuts in the Autumn Statement. Welcoming the 2p National Insurance cut, which comes into force on January 6, the Prime Minister said: “We won't stop there.”
“We're going to continue to grow our economy by cutting debt, cutting taxes and rewards for hard work,” he added.
There has been much speculation about the Tories' tax proposal for voters, but party strategists want to shift more focus to Labour's spending. The Telegraph can reveal that one idea being discussed is a change to the government's fiscal rules.
Under current rules, the share of debt in national income should fall within five years.
However, some government officials believe the test is too easy to meet, reinforcing the view that borrowing has no consequences if debt falls after five years.
According to the latest forecast from the Office for Budget Responsibility in November, interest costs on debt are expected to be 4.3 percent of GDP in 2023-24.
Sources said the rules could be tightened by introducing a specific measure affecting debt service cost as a percentage. GDP or total government expenditure. Not one in 10 officials is “sympathetic” to the idea.
It is argued that such a change would force Sir Keir to reveal whether he plans to increase borrowing or not.
A senior government source said the move would be a “sting in the tail” for Labor and would likely be accompanied by further tightening of the benefits bill, raising challenges with Sir Keir over whether to comply ministers' spending plans.
A senior Tory agreed it would intensify the party's attacks on Labor over borrowing as any changes to fiscal rules are likely to be announced in the Budget.
“It can't be that you're going into the election, of which our main dividing line on tax and spending will be £28 billion, [No. 10] needs to come up with something better than that,” the source said.
“Do something about the fiscal rules.” “If they can come up with something smart enough, it will be reasonable,” they added.
Ollie Bartrum, senior economist at the Institute of Government, said the debt affordability measure had some merits but needed to be weighed against the fact that there had been a “huge churn” in fiscal rules in recent years – a factor that could force the Treasury refuse to approve another change.
Downing Street's idea is said to be at an early stage and has not yet been discussed with the Treasury.
A source close to Chancellor Jeremy Hunt said Labor was already breaking the rules under the current framework. “We don't need to change our budget rules – Labour's £28 billion annual borrowing binge is already breaking our existing rules. Labour's plan means more debt and more taxes for everyone,” they said.
A Labor source said the party's £28 billion pledge to fund green projects would be delivered in the second half of the next Parliament and would be met. it will be subject to shadow chancellor Rachel Reeves's own budget rules, which ban borrowing to finance everyday spending and commit to cutting debt as a share of GDP.
Meanwhile, in his New Year message, Sir Keir set out Labour's election battle line by focusing Focus on discomfort with cost of living pressures and voters' desire for change.
The Labor leader said 2023 was “another difficult year economically for millions of people” but that “hope” was the “fuel of change” and the “oxygen of a better future”.
He said Labor has a plan to tackle the costs of – surviving the crisis, lowering energy bills, “getting our streets back” and “getting the NHS back on its feet.”
“But most importantly, I am committed to updating our policies, so that she can serve our country again,” he said.
“I know that politics is not particularly respected in our country. Britannia. But I spent four years trying to get the Labor Party back on track. And in 2024 we can do the same in politics.”
This week Mr Sunak will make a series of weekly visits across the country to sell his agenda, starting with a trip to the East Midlands in 2024 year. on January 4 to push through National Insurance cuts.
It comes amid a war of words among Tory MPs over whether the government should prioritize scrapping inheritance tax or take action in other areas such as income tax tax.
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A cabinet source told The Telegraph that Mr Sunak could take a two-pronged approach. This suggests cutting the overall inheritance tax rate as a way to appease the right for whom it is a “totemic” issue, but pairing that with income tax cuts to get “the best bang for your buck” for voters. /p>
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