George Osborne has warned the chancellor’s bold £100bn spending plans will mean higher taxes in the future.
Sajid Javid said on Thursday he will tear up the fiscal rules set down by Philip Hammond to fund a £20bn-a-year splurge on roads, rail, broadband and buildings over five years.
Javid said his eyebrow-raising pledges, which will require a large increase in borrowing, were part of a “a new economic plan for a new economic era”.
But, as well as facing claims of hypocrisy for denouncing Labour’s similar plans for being likely to “saddle the country with debt”, Javid has attracted criticism from his predecessor under David Cameron.
Osborne, who since leaving politics has become editor of the Evening Standard, cautioned Javid against entering a spending race with Labour, saying it risked landing taxpayers with a huge bill.
The paper’s editorial on Thursday says that while “Number 11 is doing a heroic job trying to restrain” Johnson’s desire to boost public spending, Javid had become “an echo of his shadow”, Labour’s John McDonnell.
It goes on: “All this borrowing by the Tories further shatters the fiscal rules that Philip Hammond established to constrain
Theresa May, so his successor is proposing new rules.”
The editorial then goes on to claim: “Boris Johnson’s attitude to the public finances is simple: I’m in charge, and if I don’t spend it someone else will”, adding: “What isn’t a choice is that the ordinary taxpayer will pick up the bill. Because all borrowing is just higher taxes deferred.”
Nick Macpherson, formerly a senior civil servant in the Treasury, called the Conservatives and Labour’s plans “incontinent”. Have the fiscal proposals of the 2 main parties ever been so incontinent? Borrowing to invest is only sensible if it does not result in ever increasing debt. Not too late for the Lib Dems to provide some Gladstonean rigour. #soundmoney— Nick Macpherson (@nickmacpherson2) November 7, 2019Labour’s plan goes further than the Tories, with a £150bn on a “social transformation fund” over five years. That spend is on top of a £250bn “green transformation fund” over ten years, with funds will be controlled from a new Treasury office based in the north of England.
The Evening Standard editorial hints that the Tories could be planning a “national care service” proposal which Osborne says would represent “a big expansion of the state”, adding: “The big idea for the Tory manifesto is social care.
“That might send a shiver down the spine of Conservative candidates who remember the fiasco of the 2017 manifesto pledge to make the well-off pay for their care.
“But this Downing Street has found a different group of people to pay for it: you, the general public.”
Labour has said it will tax inheritances over £125,000, raise taxes on higher earners and abolish non-dom tax cuts.
But the Conservatives’ tax plans are not yet clear. Javid hinted at the Conservative Party conference in Manchester in October that he could in fact introduce tax cuts. Related... Treasury Analysis Of
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