Budget leaks make it hard to see what Rishi Sunak has left in his red box of tricks

Indeed the splurge of announcements has angered Sir Lindsay Hoyle, the Commons Speaker, no end, who, naturally, is keen for MPs and not the media to hear Government news first and insisted the UK Government’s approach was "not acceptable" and displayed discourtesy to the House.

As shouts of “resign” resounded around the Commons chamber, Sir Lindsay said: “Yes, absolutely, resign. It seems to me we’ve got ourselves in a position that if you’ve not got it out five days before, it’s not worth putting out.”

He pointedly noted how ministers used to "walk" if they briefed about a Budget. But I suspect the Chancellor will not be packing his bags at 11 Downing St just yet.

Earlier today, Labour forced Simon Clarke, the Treasury minister, to Parliament to take an Urgent Question during which he faced heckles from his own benches as well as Opposition ones, to which he remarked: “We are all committed as a Treasury team and indeed as a Government to making sure that this House is fully respected.”

But Labour’s Angela Eagle didn’t believe him and accused the Government of treating “parliamentary democracy with utter contempt”.

Even before the press release tsunami, we have had the spring statement, which set out income tax rises from next April, resulting from the freezing of the personal allowance, and for England, the freezing of tax rates, as well as the planned hike in the tax on company profits, due to rise from 19% to 25% from April 2023.

And, of course, in September Sunak announced workers and employers would, again from April, get stung by the rise in National Insurance Contributions to pay for an extra £12 billion in spending on health and social care.

The multimillionaire former hedge fund manager has declared the UK economy is now “firmly back on track” after the worst of the Covid ravages - GDP is forecast to jump by 7.1% this year - and it was only right that frontline workers would now “see their wages rise”.

So, after last November when the Chancellor “paused” public sector pay increases for 2021/22, with the exception of the NHS and those earning less than £24,000, he is now scrapping the year-long public sector pay freeze, which will pave the way for a possible wage increase next year for 5.7m workers such as teachers, nurses, police and armed forces personnel.

The actual pay offers for public workers will come in the New Year following the independent pay bodies’ report.

But, of course, there is no guarantee the increase will be higher than the rising cost of living, meaning workers could still feel worse off.

Paul Scully, the Business Minister, during Commons exchanges refused to guarantee the increases would be above the level of inflation. “That,” he explained, “will be determined by the pay review bodies.” But he added: “The Chancellor is keen to give people a rise.” The question is and will be: by how much?

Sunak has insisted his Budget focus will be on “looking to the future and building a stronger economy for the British people”.

The minimum wage is to rise to £9.50 an hour and a 59p an hour lift to the national living wage will see the lowest paid get a boost to their wages of more than £1,000 a year, which translates into a 6.6% pay rise, double the current rate of inflation.

The Treasury chief declared these measures showed the Government was “on the side of working people” and while many will welcome the pay rises, the already announced tax hikes next spring will eat into them quite considerably. In other words, it will be a case of giving with one hand and taking away with the other; ‘twas ever thus with Budgets.

Labour has pointed out that tax hikes plus rising inflation equals a cost of living crisis for many.

Christina McAnea, the Unison General Secretary, said the pay freeze would continue “in all but name” unless Whitehall departments were given extra money to fund the wage increases.

Plus, of course, while Boris Johnson has made clear he wants to see a high wage economy, if inflation, which some fear could top 5% this year, takes off, all those lovely pay increases will be eaten away.

The respected economic think-tank, the Institute for Fiscal Studies, suggested the minimum wage increase would not offset the cuts to benefits, including the contentious ending of the Universal Credit uplift.

“While this boosts earnings for full-time minimum wage workers by over £1,000 a year, those on Universal Credit will see their disposable income go up by just £250 because their taxes rise and benefit receipt falls as their earnings increase,” explained Tom Waters, the IFS’s senior economic researcher.

Mike Cherry from the Federation of Small Businesses, was decidedly downcast, saying: “For the smallest employers they will struggle to maintain jobs they need because of the increase of the national living wage, and employees will have to face the increase of NI contributions next April so it is problems all around.”

Of course, large areas of the public sector are devolved; for example, the School Teachers’ Review Body only covers England while the NHS Pay Review Body makes recommendations for England, Wales and Northern Ireland and decisions on pay are for the ministers responsible at Holyrood, the Senedd and Stormont.

There will be a knock-on windfall for the devolved administrations because of the extra Government spending in England, which Edinburgh, Cardiff and Belfast can spend on anything they like. No doubt, tomorrow, Alister Jack, the Scottish Secretary, will declare such extra cash as another Union dividend.

Any extra funding made available to increase pay set in England by the Tory Government, could also result, under the Barnett Formula, in more money going to the devolved administrations, which means they could choose to boost salaries across other parts of the UK.

Of course, alongside the Budget is the spending review, which will set out expenditure for three years ahead.

The extra spending for health and education as well as defence means the Treasury has asked other departments to identify "at least 5% of savings and efficiencies from their day-to-day budgets," which translates into more pain for some parts of Whitehall.

With his Downing St neighbour loudly urging the Chancellor to spend, spend, spend, Sunak will be keen to underpin his fiscal Conservatism given he has an idea of one day replacing Boris at the helm.

The cloud overhanging his speech will be the eye-watering levels of Government debt given, thanks to Covid, the Government borrowed £320bn in the last financial year - the highest figure seen outside of wartime – and it’s expected it will borrow another £180bn in this one.

Interestingly, it’s been suggested Sunak has told the Office for Budget Responsibility, the independent economic watchdog, to come up with forecasts using old numbers, which will reflect a more pessimistic view on the economy than more up-to-date data.

All of which will mean that when the Chancellor stands up at the dispatch box tomorrow he will be able to tell MPs the economy is growing decidely faster than anyone had thought given the pandemic, hinting that next year he could flag up the prospect of some pre-election tax cuts. Who would have thought it?

In the media splurge over the last few days we have seen him announce, among other things:

• an increase in the minimum wage for around two million workers with those aged 23 and over to seeing their pay increase from £8.91 an hour to £9.50 from April;
• a 59p hourly boost to the so-called “national living wage” will result in a full-time worker on the lowest pay getting a rise of more than £1,000 per year, an inflation-busting 6.6% hike;
• £5.9bn for NHS England to tackle the waiting list backlog;
• £1.4bn for "internationally mobile" companies to invest in Britain’s infrastructure;
• £6.9bn for England's city regions to spend on train, tram, bus and cycle projects as part of the Levelling Up agenda;
• £2.6bn on creating 30,000 new school places for children with special educational needs and disabilities south of the border;
• £1.8bn for building around 160,000 new homes on derelict or unused land ie brownfield sites in England;
• £850m to restore museums and art galleries including the V&A in London and Tate Liverpool;
• £700m to protect UK borders, including £74m for a new fleet of patrol boats;
• a new £150m fund to help smaller businesses in Scotland;
• £11m for the UK and Ireland’s bid for the 2030 men’s football World Cup and
• £30m to prepare UK bids to host the 2025 Women’s Rugby World Cup and the 2026 Tour de France Grand Depart.

Given the price rise at the petrol pumps, the Treasury has been dropping big hints that Sunak will also confirm fuel duty will again be frozen; the 12th year in a row. Which will not go down well with the green lobby. 

Across some parts of the country, fuel is at record high. Just to focus the Chancellor’s mind Conservative MPs from the Northern Research Group wrote to him, warning a hike in fuel duty would be a “mistake”. However, given COP26 is just days away, expect something on matters environmental as part of the Budget package.

Of course, chancellors like to have something up their sleeve on Budget day to keep the troops happy and, more importantly, leave voters thinking he is not such a bad chap after all.

Yet given the colony of rabbits that have been emerging from No 11, it’s difficult to see where Rishi the magician will produce the next one from. But, chances are, he will.