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Rishi Sunak should not try to raise taxes in this parliament, the leader of the group of conservative deputies from the north told Sky News.
When the chancellor delivers his spending review later, he will also reveal a set of dire forecasts,
These are likely to show the lowest growth in 300 years, with a long-term permanent gap of around £ 40-50bn between cash raised in taxes and money spent.
MPs believe Sunak will say the gap needs to be closed, setting the stage for more tax increases in the future, although specific rates will not be raised today.
Mr. Sunak will not establish new “fiscal rules” today, nor will he disclose the necessary combination of tax increases and spending cuts.
Jake Berry, founder of the Northern Research Group, said: “The Chancellor has made it clear that the mission of all Conservative governments is to balance the books and I am sure he will say that again (in the spending review).
“I think it is quite difficult to see the tax increases happen very quickly. Nobody wants to end this recovery. My personal opinion is that they will probably be after 2024.”
This means that the tax increases would come at the cusp of the next general election, meaning Prime Minister Boris Johnson and Sunak must admit that they raised taxes on the Tory manifesto, risking political unpopularity, or failing to explain them and face claims that they are not. leveling up with the public.
However, Berry argued that there is no danger of the debt becoming unaffordable, so Sunak should continue to spend to support the recovery.
He said: “The reason you can afford to take that approach is that even though we are one of the most indebted countries, we can borrow money cheaply.”
“The global line of what is an acceptable relationship between income and debt has changed for all the nations that have doubled and spent money to overcome this crisis. There is a problem, there is a day when we all have to pay, I do not I think it will come very soon. “
Torsten Bell, director of the Resolution Foundation, agreed with Berry that tax increases to close the £ 40bn gap probably should be delayed until 2023 or 2024 because the recovery was dangerous.
Bell added that this was on a similar scale to the consolidation carried out by George Osborne, the coalition’s chancellor in 2010, who revealed £ 40bn in spending cuts and tax increases.
However, the spending cuts were much deeper during that period because Osborne was also pushing massive income tax cuts, so the necessary measures were more drastic.
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What is the expense review?
The spending review establishes the one-year budgets for the Whitehall departments and the final details for the financing of some investment projects. It has already announced investments for some areas such as the Ministry of Defense, NHS and training, which means that other areas such as the prison service and city councils could suffer cuts.
However, those cuts are not going to be on the scale seen under former Chancellor George Osborne, Bell said.
The Director of the Resolution Foundation said: “Rishi Sunak’s tone on public finance is different from Boris Johnson’s; he is much more likely to signal that tough times are coming and that there will be some tax increases, and that tough decisions about spending in the years ahead.
“Actually, if we look at the essence of what we really decided to do, the chancellor does not want to be accused of not spending enough.
“That’s what has happened in general. He really isn’t going to make big cuts to public spending. Rishi Sunak doesn’t want to be George Osborne.”
“If you look at the areas that he is concentrating on right now, like the reduction in aid and the still indefinite freeze on public sector salaries, they are not the ones where you see lasting political difficulties. So, Generally speaking, it is tough on the public finances, but it has actually spent huge amounts of money next year and I hope so in the spending review.
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Government ‘too indifferent about the impact of long-term unemployment’
This comes as the Chancellor is set to announce a new £ 2.9 billion three-year plan to help one million unemployed people in their job search, along with £ 1.4 billion of new funding to increase Job Center’s capacity Plus.
According to the plan, people without work for more than 12 months will receive intensive and regular work support adapted to their circumstances.
Tens of billions of pounds of investment in promised infrastructure will support jobs and spur Britain’s recovery from the coronavirus, the government hopes.
Mr Sunak said: “My number one priority is protecting jobs and livelihoods across the UK.
“This spending review will ensure that hundreds of thousands of jobs are supported and protected in the acute phase of this crisis and beyond, with a multi-million dollar investment package to ensure that no one is left without hope or opportunity.”
How will the spending review affect you and the country? Sky economics editor Ed Conway will answer your questions on the Sky News app and website starting at 5.30pm. Email your questions to [email protected]
