Rishi Sunak, the Chancellor of the United Kingdom, paved the way for a difficult budget this month by declaring that excessive public lending is ‘immoral’ and suggesting that future tax cuts could be possible if spending is brought under control.
Sunak’s first personal speech during the Conservative Party’s annual conference as chancellor on Monday barely mentioned the supply crisis which hit energy, fuel and food. He admitted that there was no ‘magic wand’ to deal with it.
Instead, Sunak is offering a future for Britain based on sound public finances following the explosion of coronavirus-related public spending, building on the ‘flexibility’ Brexit offers to adopt new technologies.
Images of long queues at petrol stations and recently set aside collapse of energy companies, he continued: ‘I believe we are going to make the UK the most exciting place on earth.’
Sunak said he was a pragmatist on economic policy and that ‘senseless ideology is dangerous’, but that he came tight on fiscal discipline after the huge public spending needed to counter the effects of the pandemic. .
“We need to fix our public finances,” he said, adding that excessive borrowing and unsubstantiated promises “are not just economically irresponsible – they are immoral”.
Sunak is expected to set out new fiscal rules in this month’s budget, ending the loan to finance daily government spending. He reminds his party that the national debt amounts to 100 percent of the gross domestic product.
Although the chancellor increased national insurance contributions by £ 12 billion last month, he hinted that fiscal discipline could allow for future tax cuts, which could deliver Tory MPs ahead of the next general election.
“Yes, I want tax cuts,” he said at the party conference in Manchester. “But to do that, we need to get our public finances back on a sustainable footing.”
In response to Tory critics who wanted him to maintain the £ 20-a-week temporary lift to universal credit to alleviate a life crisis, Sunak suggested the Conservative response was better work than more help from taxpayers.
Referring to families struggling to get by, he said, “Is the answer to their hopes and dreams just to increase their benefits?”
Sunak’s speech comes against a background of labor market shortages in key sectors, including in the HGV industry, rising energy prices and fuel shortages. David Morris, a Tory MP, warned of a ‘winter of discontent’.
But the chancellor hardly mentions the issue that grips the country. “We face challenges in supplying chains, not only here, but also around the world, and we are determined to tackle them head on,” he said.
There were no new policy prescriptions for solving the supply problems, which Sunak acknowledged could last until Christmas.
Sunak said earlier Monday that ‘pragmatic controlled immigration’ could be part of the short-term solution; he said at the conference that “good work, better skills and higher wages were the ultimate goal”.
He said he was ‘proud of Brexit’ and claimed that ‘the agility, flexibility and freedom that Brexit offers would be more valuable in a 21st century global economy than just the proximity to a market’.
Business leaders have expressed surprise at Sunak’s claim that rising wages will yield productivity gains. “It’s usually an argument from the left,” said one.
Other business leaders warned that the labor market’s “adjustment period” after Brexit and Covid-19 would last until after Christmas. One said: “The disruption does not last two months – it can take two years.”
Sunak has confirmed that it is expanding its pandemic ‘plan for work’ to 2022 with an extra £ 500 million to help young people find work and to employ older workers.
He mentions his years of education ‘working at technology companies in California’ as a look to the future. But he claimed that the UK had already “attracted more venture capital investments to our businesses than France and Germany combined”.
Sunak has announced that it will set up ‘2,000 elite AI scholarships for underprivileged young people’ and double the number of Turing AI research fellows.