Little Hope For Giveaways In Budget After Net Zero Plan

Rishi Sunak has been a chancellor defined by crisis. Now he must show what an economy taken off life support will look like in next week’s Budget.

- Annai Saac

Much of his hand has already been revealed. The net-zero strategy and the Treasury’s accompanying report show where most of the so-called “new money” will be headed when he takes to his feet in the commons on Wednesday. The plans amount to a £26bn government investment in a “green industrial revolution” and will support 190,000 jobs by 2025, and 440,000 by 2030, according to government ministers.

Net zero will be extremely tough on the public finances unless there is a shift in the way goods and services at taxed in the economy, a separate Treasury analysis found. It was full of signals that showed a negative view of increasing public borrowing, too.

Phasing road taxes on petrol and diesel cars could leave a £37bn black hole in the Budget unless “new sources” are found it said. Going green will mean a “significant and permanent fiscal pressure” on the UK’s finances.

Simply, the message was: net zero is a good reason for no net giveaways on at the Budget. “We’ve had our whack,” an official at the business department told The Independent.

It also follows a decision to quell the risk of Tory backbench rebellion by rushing through a rise in national insurance contributions ahead of the Conservative Party conference.

Treasury insiders are playing down traditional expectations for major rabbits pulled from hats. There will be no grand reform of business rates, they say. Nor will there be a clear pathway for shifting the health and social care levy towards social care, the move that is meant to occur after an initial drive to ease NHS backlogs in the wake of the pandemic.