Leveling Up Secretary Simon Clarke, a member of the Prime Minister’s inner circle has told The Times that the British people should expect big cuts in public spending because for too long Westerners have been living in a “fool’s paradise.”
The regional administrations of the United Kingdom are requesting an emergency meeting with Chancellor Kwasi Kwarteng to discuss immediate measures to counteract the negative consequences of the mini-budget.
The finance ministers of Wales, Scotland, and Northern Ireland warn in a joint letter that the government’s spending plans constitute a “big bet” that will result in another decade of austerity.
It comes after one of Liz Truss’s closest political friends reaffirmed the government’s economic agenda and warned of impending cuts to public spending.
Leveling Up Secretary Simon Clarke, a member of the inner circle of the prime minister, told The Times that the British people should anticipate big cuts in public spending because the West has been living in a “fool’s paradise” for too long.
In the wake of Chancellor Kwasi Kwarteng’s tax-cutting mini-budget, he stated that the government must ensure that the “very massive” state is “fully aligned with a lower tax economy.
It has prompted fears that another era of austerity is just around the corner, with welfare recipients likely to be the hardest hit.
In a letter to Mr. Kwarteng, Rebecca Evans, the Welsh finance minister, joined the finance ministers of Scotland and Northern Ireland in highlighting the significant impact of “the largest set of unfunded tax cuts for the wealthy in over 50 years,” describing it as “a massive gamble on public finances and the health of our economy.
They cautioned against being doomed to another decade of austerity and expressed grave concern over reports that UK government departments would be asked to make spending cuts to balance the budget, which could have profound repercussions for devolved budget settlements that have already been eroded by inflation.
Mr. Clarke, though, told The Times: “Western Europe is living in a fool’s paradise in which we can be ever less productive relative to our peers and still have a very large welfare state, believing that the two are somehow compatible in the medium to long run.
They do not. We must confront this issue…if we want these robust public services, we will have to pay for them.
“It is crucial that we examine a very large state and determine how to ensure that it is in complete alignment with a low-tax economy.”
On the eve of the Conservative Party conference, the chancellor defended his mini-budget by stating that the government “had no choice” but to do “something unusual” to stimulate the economy.
As a result of the mini-budget, the pound fell to an all-time low against the dollar and the Bank of England was compelled to invest billions to prevent the collapse of the pensions industry.
What the Thatcher administration did in the 1980s
Mr. Clarke acknowledged that it had been an “uncomfortable week” and supported Ms. Truss, stating that she would not deviate from policies they expected would be unpopular and comparing her situation to that of Margaret Thatcher in the 1980s.
“If I had to choose one word to describe Liz, it would be deliberate,” he remarked. “She was aware, and we had surely discussed this during the summer, that this would not be a pleasant experience.
“[She realized] early on that there was a real possibility of courting disfavor by saying and doing things that weren’t going to be simple or quick wins. Frankly, she is acting by her moral beliefs.
“In some respects, there is a similarity with the 1980s and what the Thatcher administration was attempting to accomplish in terms of a reset moment in which you radically reconsider how not only the previous administration, but numerous administrations, operated.”
We plan to be stringent.
Wales Secretary Sir Robert Buckland told that while the government will adhere to its existing three-year expenditure review schedule, families should expect to learn ministers’ plans in the coming weeks.
Mr. Buckland stated that he expects the market would view the next government announcements as demonstrating “fiscal restraint.”
He appeared to reinforce Mr. Clarke’s implication when he stated, “We plan to be quite stringent when it comes to reducing public spending.
This will be developed in the next weeks. There will be numerous announcements about both spending and supply-side reforms.
“Whether it’s daycare… or… broadband access, all of these things are part of an entire package aimed to, first and foremost, encourage economic growth and, secondly, emphasize the government’s accountability.”
We had to take a different approach.
Overnight, Mr. Kwarteng stated that the public expects government expenditures to be strictly governed.
He said in The Daily Telegraph, “The British taxpayer wants its government to operate as efficiently and effectively as possible, and we will meet that demand.
“Not all of the initiatives we announced last week will enjoy widespread support. But we had to take a different approach. We had no alternative.”
The chancellor asserted that he will develop a “serious plan” to restore fiscal stability and “commitment to spending control”
Following last week’s mini-budget, Ms. Truss acknowledged for the first time on Friday evening that “there has been disruption” to the British economy.
Asked on Friday whether she accepted that this was a crisis of the government’s own making, the prime minister responded: “It was extremely important that we took urgent steps to deal with the costs that families are facing this winter, putting in place the energy price guarantee for which we’ve had to borrow the money… but also ensuring that we are not raising taxes at a time when there are global economic forces caused by the conflict in Ukraine that we need to deal with.”
“I acknowledge that there has been disruption. But it was of the utmost importance that we provide aid to families as soon as possible.”
Shadow international trade secretary Nick Thomas-Symonds told on Saturday, “This is a Downing Street-made Tory crisis… They have brought the economy to its knees by granting massive unfunded tax cuts to the nation’s wealthiest individuals, and the working class will pay the price.
“They’ve also ruined our international standing, and what the government has done will cause economic hardship for the people they’ve selected.” The government must summon Parliament and withdraw the proposed budget.”
Truss and Kwarteng met with top Office for Budget Responsibility (OBR) officials on Friday.
On November 23, Mr. Kwarteng wants to release an updated set of economic estimates from the Office for Budget Responsibility (OBR) and a medium-term fiscal plan detailing how he aims to reduce the national debt.
