In the autumn of 1947, the then Labour chancellor of the exchequer, Hugh Dalton, resigned after revealing key budget details in an impromptu remark to a political journalist of the now defunct evening paper Star.
The leak was printed even before Dalton had finished delivering his budget speech and while the London stock market was still open. In those days, when pre-budget purdah meant that the chancellor would disappear from public view weeks in advance to allow the Treasury to consider its policy options in a confidential atmosphere, breaking a budget secret was considered a scandal worthy of resignation.
In 2021 Britain, however, the tradition of pre-budget secrecy has long gone, much to the speaker of the House of Common’s chagrin. In fact, formal government announcements in the run-up to a budget have become so commonplace, that it makes one wonder if there’s anything left to announce on the day itself.
The funding announcement blitz we are currently experiencing ahead of Rishi Sunak’s budget and spending review statement tomorrow is a clear example of that evolution. But it also serves a wider purpose – securing good headlines with shiny investments and reports of largesse.
Chief among them is the rise of the national living wage from £8.91 to £9.50 from April 2022, which would translate into full-time workers aged over 23 getting £1,074 extra a year before tax. The move, which follows the recommendation of the low pay commission, is more than twice the current 3.1% rise in the cost of living.
Other spending pledges set to be made at lunchtime tomorrow include the end of a “temporary pause” in salary progression for at least 1.3m public sector workers; £6.9bn for England’s city regions to spend on train, tram, bus, and cycle projects; £5.9bn for NHS England to tackle the backlog of people waiting for tests and scans; £5bn over the next three years for health research and development; and £1.8bn for building around 160,000 new homes on derelict or unused land in England.
But as the old saying goes, ‘all that glitters is not gold.’ The chancellor has already been criticised for a lack of detail, as well as not taking rising inflation into consideration. What’s more, although these public expenditure announcements sound reasonably generous, they are likely to prove tight in relation to current demands on public services.
From their perspective, British businesses have voiced their concern over the forthcoming rise in national insurance contributions. Amid surging energy prices, labour shortages, and widespread supply chain disruption, companies are urging the government to relieve pressure on them, while 39% of respondents in an EY survey of more than 1,000 businesses think taxes should go up to tackle greenhouse gases.
Crucially, this year’s autumn budget will be delivered only four days before COP26 kicks off in Glasgow and as the prime minister, Boris Johnson, prepares to play host to the climate summit. Against this background, expect any spending announcements left to be scrutinised through the carbon lens.