Theresa May, the former prime minister, and Sajid Javid, who was chancellor until last month, sounded warnings over the level of spending in the budget, stressing the continued need for fiscal discipline. May led the charge of backbenchers apprehensive about the long-term impact of the public and capital spending hike.
In a debate in the Commons after Rishi Sunak delivered his first statement, she said: “Although spending a lot of money may be popular and may seem the natural thing to do, there is of course that necessity to have a realistic assessment of the longer-term impact of those decisions and of the longer-term consequences.
“It is also necessary to ensure that we have that restraint and caution that enables us to make the public finances continue to be strong into the future.”
The prudent management of the public finances was one of the unique selling points of the Conservative party, she added.
Javid, who quit the Treasury on 13 February over a No 10 power grab, also said the Conservatives’ fiscal rules set out in their December 2019 manifesto must be adhered to.
The rules “help us keep our economy strong, help us to keep taxes low, and they preserve our flexibility for when we need it most,” he said, claiming that they provided the foundations for Sunak to deploy a substantial spending package.
“Sticking to those rules in normal times is what separates us from the parties opposite,” he added.
The manifesto pledged to run a balanced current account budget by the middle of the next parliament and that borrowing for infrastructure would not exceed 3% of GDP. Under a third fiscal rule, the government would have to reassess its borrowing plans if spending on debt interest rose above 6%.
Jeremy Corbyn labelled the budget “an admission of failure”, saying the UK was in a far worse position to cope with the economic hit of coronavirus because of a decade of austerity.
The Labour leader also condemned Sunak’s opening of the spending taps as both too little to make up for 10 years of budget cuts and an acknowledgment that austerity had been a failure.
“Today’s budget was billed as a turning point, a chance to deliver, in particular on the promises made to working-class communities during the general election. But it doesn’t come close,” Corbyn told the Commons.
The boast that the spending plans were the biggest on record was “a sleight of hand”, Corbyn said, adding that the government’s mantra of seeking to level up the UK was “a cruel joke”. He said: “The reality is that this is a budget that is an admission of failure – an admission that austerity has been a failed experiment. It didn’t solve our economic problems, but made them worse.”
David Gauke, the former chief secretary to the Treasury, who lost his seat at the election after running as an independent candidate, said that as the spending pledges had not been accompanied by tax rises, he had concerns about the overall fiscal strategy by Johnson’s government.
He said: “On the longer-term measures, there’s a case for more spending, but without commensurate tax increases, the public finances are now in a weak position if there’s a sustained downturn in the economy.”
Ryan Shorthouse, the director of Bright Blue, a Conservative thinktank, warned that spending pledges on the coronavirus outbreak had not been factored into estimates by the Office for Budget Responsibility and tax rises could come further down the line.
He said: “If, as seems likely considering growth forecasts, borrowing increases substantially to fund both new capital and current spending, future generations of taxpayers will face a bigger bill. The Conservative party should not shy away from stressing the economic and moral need for, and their commitment to, fiscal discipline.”
However, backbenchers were keen to praise Sunak’s first budget both for its content and delivery. Kevin Hollinrake, MP for Thirsk & Malton, the constituency neighbouring Sunak’s Richmond seat, said the 39-year-old chancellor’s prospects to be a future prime minister were virtually “nailed on”.
“Clearly the chancellor has always got a good chance to get to the top of the ladder and he must now be a leading candidate by a long way. When you rise quickly through the ranks, you usually upset people, but he hasn’t,” he said. “He’s not flashy and he’s never one to say he knows everything. He will always ask: ‘Tell me more about that.’”
Hollinrake, parliamentary private secretary to Michael Gove, said he could pick out budget announcements which he felt were a direct result of Sunak’s personal views, including the £1bn Building Safety Fund to remove unsafe cladding from buildings.
He suggested Sunak felt that government had previously been “in the wrong place” on that issue. He said: “He confronts a problem. He doesn’t put it on the ‘too difficult pile’, he analyses and deals with it … And coronavirus – that wasn’t even in train when Sajid Javid left. All of that feels like Rishi’s own work and it shows the calibre of him.”
Former Tory vice-chairman Alec Shelbrooke MP said: “Certainly for most of us on the backbenches it’s like he’s been in the job for years. It was like he was made for it. For politicians a lot is in the voice, and it’s his method of delivery, how he emphasises the points he wanted the public to hear.”
Shelbrooke, a trade unionist and member of the Blue Collar Conservatism group, said the policy to allow subsidies for farmers who use red diesel to continue was another policy likely to be straight from Sunak’s own personal wishlist, as was money for repairing flood defences.