Politics intensifies again as funding issue becomes a liability

For the first time since the general election, party politics will be back in full swing in Westminster on Monday.

Certainly there was a bit of that at the opening of Parliament a few weeks ago, where ceremony and decorum were really at the forefront.

I don’t have high expectations for either of them.

The Chancellor of the Exchequer will be speaking in the House of Commons this afternoon and will claim that since Labour won the election, a graveyard full of political secrets have been coming out of every cupboard in Whitehall.

For Rachel Reeves, it’s not “things are only getting better”, as Labour’s 1997 victory song proclaimed, but rather “things are getting a lot worse” or something similar.

Two big questions remain: how credible is this claim, and why is the government doing this now?

First, there is the issue of credibility.

“I find this completely credible,” Paul Johnson, director of the highly respected Institute for Fiscal Studies (IFS), told the BBC.

The basis for this argument is that a lot of information about finances is now publicly available. The budget was announced in March, and in parallel with that Office for Budget Responsibility Economic and Fiscal Outlook.

Yet the argument laid out in the House of Commons statement, the 30-odd pages of accompanying documents and by Rachel Reeves at the Treasury press conference will likely go something like this: “We blame everyone else.”

They estimate that by the time the work is finished by Monday evening, the IFS and other agencies will acknowledge that the figures differ from those previously published.

At the heart of their argument is the size of so-called “in-year costs,” which were not included in documents submitted in the spring.

Senior Conservatives I spoke to said they found this incredible just a few months into the financial year, after which politics is about choices and it is up to Labour to decide what it wants to do.

How will the Labour Party respond to this? A thread about X by former financial adviser and Labour peer Lord Wood.

Essentially, he argues, you have to be in government to know the difference between a project’s cost estimate and what it actually charges.

This will be used as an argument to justify the cancellation of various rail, road and hospital building projects, but ministers will claim that there was never and now is no money for them.

It also expects the government to accept above-inflation pay increases for teachers and many NHS staff as recommended by the sector’s independent pay review body.

Ministers will argue that this is the right thing to do and that they expect there will be no further strikes.

But it Choices and expensive And that’s not the fault of the previous administration.

While her opponents claim her successor is in a dire situation, Shadow Chancellor Jeremy Hunt is expected to forcefully argue that he has taken many of the tough decisions to put the economy in a much better position than it was before.

Of course, these two things can be true at the same time.

So why is the government doing this now?

Now, as we countdown to the next general election, I want to talk about our wider strategy, which will be developed over the next five years in three parts.

The first element is what is called “correcting the foundations.”

We will be hearing endless references to this in the coming weeks and months, as the Conservative party debates who should replace Rishi Sunak and how grim the situation is.

The aim of the second phase is a sense of “Rebuilding Britain” and in that literal sense – building things, especially houses. Building a lot more of them is needed but that may be easier said than done. Details are due to be announced on Tuesday.

And the third element is that people feel more prosperous. And as we approach the next election, I hope that this becomes a real sentiment, not just a hope or a slogan. We’ll see.

But going back to “laying the groundwork,” Monday marks the first day of that, and also the day to lay the political groundwork for expected tax increases in the fall.

You can also see the budget date.

Tax increases are widely expected to come in October, and tax hikes are almost as widely expected.

Increases in the main rates of income tax, VAT and national insurance have been ruled out, so don’t be surprised if instead we see increases in capital gains tax and inheritance tax, and reductions in pension tax allowances, for example.

However, that’s in the fall.

Today, setting aside the political sycophancy of recent weeks, there will be some pretty vociferous discussion about the old administration, the new administration, and what comes next.