James Kirkup James Kirkup

Are the Tories about to abandon austerity?

Last week I wrote a column elsewhere arguing, among other things, that it is time for the government to look beyond its (almost impossible-to-meet) commitment to a budget surplus at some point in the 2020s and think about a looser target that might allow more public spending, seeking perhaps a primary but not overall surplus. (IE tax receipts equal spending on everything except debt interest.)

I mention this not to advertise that column but because I think some of the reactions to it are worth sharing. As expected, one hawkish Cabinet friend was quick to scold me for advocating ‘yet more borrowing’. But another, well-acquainted with Treasury thinking, simply described the idea as ‘interesting’ and suggested we discuss it soon.

Today, the Institute for Fiscal Studies has likewise questioned that commitment to an overall surplus by the middle of the next decade, suggesting it might be more ‘sensible’ to abandon it. These suggestions come amid countless calls for more spending, on welfare and public services. And some of those calls come from the Tory benches, which matters a lot in a hung Parliament.

First it was public sector pay, then Universal Credit. My guess is that NHS spending will be next: smart Tories are aware that the state of the health service matters more to most voters today (and is more important to the party’s standing) than Brexit. Whispers in Whitehall suggest there could yet be movement here, just in time for this year’s headlines about a winter crisis.

Could the Budget next month see a move away from the ‘austerity’ policies that have held sway since 2010? This is purely a hunch based on observation, but I think there is a real possibility of some sort of change on the fiscal rules.

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