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By ALEX WICKHAM
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Good Wednesday morning. It’s budget day.
DRIVING THE DAY
NEW AGE ECONOMICS: Rishi Sunak will deliver his budget today claiming his management of the U.K.’s finances has left the economy in a better place than expected, allowing him to invest tens of billions of pounds into public services while setting new fiscal rules that commit him to future spending discipline. The chancellor will strike an upbeat tone — bolstered by new Office for Budget Responsibility forecasts that will show significantly faster than predicted growth — as he heralds “an economy fit for a new age of optimism.” But Sunak’s efforts to look forward from the coronavirus pandemic and outline the substance of Boris Johnson’s promise to level up Britain and create a new high-wage economy will also be judged by his plan to deal with the worsening cost-of-living crisis. He gives today’s statement against a backdrop of labor shortages, a supply crisis, soaring energy bills and the specter of inflation — and will need a major cost-of-living rabbit to help worried Britons through the winter.
Key timings: 8.30 a.m. — Sunak will brief the Cabinet … 10.45 a.m. — he leaves No. 11 for parliament … midday — Prime Minister’s Questions … 12.40 p.m. — Sunak stands up in the Commons to deliver his Budget and Spending Review … 1.30 p.m. — his speech finishes … Johnson and Sunak will then visit a brewery in the afternoon for post-budget pics, the Telegraph’s Ben Riley-Smith reports (surely that means a cut to alcohol duty is coming?) … before the chancellor then gives his first interview to Robert Peston broadcast on Twitter at 9 p.m. and on ITV at 10.45 p.m.
What Sunak will say: The Treasury has trailed these words that the chancellor will say at the despatch box later: “Today’s budget begins the work of preparing for a new economy post COVID. An economy of higher wages, higher skills, and rising productivity. Of strong public services, vibrant communities and safer streets. An economy fit for a new age of optimism. That is the stronger economy of the future.”
A Treasury insider adds: “In what has been an incredibly difficult set of economic circumstances to deal with, this budget and multi-year spending review will show this is a government committed to investment in public services, focused on growth and resolute about building resilience for a prosperous future.”
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Political context: Sunak has come through a summer of fractious No. 10 vs. No. 11 relations to remain chancellor after the reshuffle, and he will look to demonstrate a newly united front with Johnson today. It got pretty bad a few months back following a series of disagreements over public spending and Tim Shipman’s stories in the Sunday Times revealing Sunak’s ill-fated letter to the PM on foreign travel and Johnson’s subsequent threat to demote him. By all accounts things have since improved. Whitehall insiders note No. 10 has allowed No. 11 free rein to make its spending announcements this week, and Brand Rishi is back all over Twitter with pics of Nova the dog — not to mention the chancellor’s £95 Palm Angels sliders (h/t the Mail’s John Stevens). One Sunak ally last night sent Playbook a Vice article headlined “Wearing Socks With Sandals Is Officially Cool Forever.”
A reason for that cheeriness … is that the OBR is expected to revise up its growth forecasts for this year from 4 percent to 7 percent, according to the Times‘ Oli Wright, Gurpreet Narwan and George Grylls. Their splash says this gives Sunak £20-30 billion extra to spend, with another £10 billion a year coming down the track if the OBR cuts its estimate of long-term economic damage caused by COVID from 3 percent of GDP to 2 percent. A Whitehall insider wouldn’t confirm these numbers last night, though told Playbook they thought people would be surprised by how much better the economy is doing.
Rishi dishy out: In an excellent preview of today’s statement, my top POLITICO colleague Esther Webber explains how Sunak is “trying to have it both ways” today by “sounding like a big spender and a fiscal hawk all at the same time.” In budget pre-announcements this week HMT already committed to increasing the minimum wage … ending the public sector pay freeze … £7 billion on new transport links … £6 billion more on the NHS backlog … £5 billion on science research and development … £3 billion on skills … £2 billion on new housing … £2.6 billion on special educational needs schooling … £1.4 billion on boosting foreign investment … £700 million on borders and £500 million on families. Yet as the Institute for Fiscal Studies’ Ben Zaranko tells Esther: “Until we get the full picture we can’t assess how much of this is new or how many big shiny announcements are coming at the cost of something else.”
The flip side … of Sunak’s budget is what may well be more important long term, both economically and politically: Sky’s Sam Coates says he will unveil new fiscal rules that put a “ceiling” on his future spending. The chancellor is expected to commit to running a surplus by the end of this parliament, bringing in more in tax than he is spending day to day. The FT’s George Parker and Chris Giles report he also wants a “rainy day fund” of billions of pounds set aside to deal with potential higher interest rates down the line. They note “Sunak hopes that this insurance fund will not be called upon and will ultimately turn into a pre-election war chest” — i.e. tax cuts before 2024. The Sun’s Harry Cole says “Squishy Rishi” — send your complaints his way — will drive down departmental costs and get the country’s £2.2 trillion debt falling by the next election.
Budget cakeism: So how does Sunak propose to splurge billions leveling up the country with generous spending programs while also streamlining departments, keeping money in the bank and getting Britain’s debt down? To have his Twix and eat it? The revised growth forecasts will help. It may also turn out that more of those spending announcements were repeats or weren’t quite as generous as spun. In his detailed and must-read scene-setter, the BBC’s Faisal Islam says many of these announcements were long-term investment on equipment and infrastructure that “will not count” against the new rules.
Cost of lunching crisis: As Islam writes, Sunak’s main challenge today is to calm cost-of-living concerns across the country, as the government runs the risk that “boosterish rhetoric about the rebound from last year’s record falls will struggle to match the lived reality of ordinary British families.” The FT’s Peter Foster and Daniel Thomas have a similarly strong and comprehensive piece on the shortages and price rises, including this stunner of a pink ‘un quote from the restaurant industry: “If Le Gavroche can’t open for lunch, then we really are in the sh*t.”
Taper over the cracks: The Treasury has done well to keep us all guessing on this year’s rabbit, which apparently won’t be a cut to VAT on household energy bills. Surely it has to be something on the cost-of-living crisis, though — as the FT’s George Parker says: “Tory MPs expect today’s ‘surprise’ could be a package to help poorer households through the winter.” The Sun’s Harry Cole, Jack Elsom and Natasha Clark have done some sleuthing and reckon Sunak will cut the Universal Credit taper rate, which effectively taxes people 63p in the pound on earnings above their base level of benefits. The paper says this would have the effect of raising wages for millions. The Mirror’s Dan Bloom got a top scoop last month that HMT was considering slashing the taper rate from 63p to 60p.
What will the NHS cash go on? The government seems to be throwing money at the NHS at the moment to wade through the backlog and get it back on its feet post-pandemic, though big numbers aside, many questions remain about how exactly that cash is going to be spent. A health source tell Playbook that an important aspect that people in the NHS will be looking out for is the workforce and training budget. “If that isn’t protected properly then that will make delivery much harder,” they warn.
Business woes: This budget is also an opportunity for Sunak to heal his rift with business following his decision to increase National Insurance. Playbook is told there is already concern among small businesses about the increase to the minimum wage. The Federation of Small Businesses surveyed small employers in May about how they’d respond to a 5 percent rise in the National Living Wage — 31 percent said they’d have to raise prices to afford it, 17 percent would reduce recruitment, 15 percent would cut investment, 9 percent would cut training. Today’s NLW rise comes in at 6.6 percent. Small businesses will want some business rates relief to help them pay for it … not something that looks forthcoming today.
What Labour is saying: The opposition has of course gone big on business rates — committing to scrapping them entirely and replacing them with a different system — and Shadow Chancellor Rachel Reeves outlines her alternative budget top lines this morning: “With costs growing and inflation rising, Labour would ease the burden on households, cutting VAT on domestic energy bills immediately for six months. And we would not raise taxes on working people and British businesses, while online giants get away without paying their fair share.”
**Teresa Ribera, Spanish minister for the ecological transition, will be joined by UNFCCC Executive Secretary Patricia Espinosa, European Climate Foundation CEO Laurence Tubiana and Singapore Sustainability Minister Grace Fu for a discussion to unpack COP26 at POLITICO Live’s Sustainable Future Summit on November 30-December 1. Don’t miss it – register today.**
COVID UPDATE
TEST AND WASTE: There is another major story breaking this morning — inexplicably timed, given it’s budget day — the Public Accounts Committee has released its report into the NHS Test and Trace program, finding it “muddled, overstated and eye-wateringly expensive.” The Telegraph’s Laura Donnelly splashes the story.
PAC Chair Meg Hillier has this damning conclusion: “The national Test & Trace programme was allocated eye watering sums of taxpayers’ money in the midst of a global health and economic crisis. It set out bold ambitions but has failed to achieve them despite the vast sums thrown at it. Only 14% of 691 million lateral flow tests sent out had results reported, and who knows how many took the necessary action based on the results they got, or how many were never used. The continued reliance on the over-priced consultants who ‘delivered’ this state of affairs will by itself cost the taxpayer hundreds of millions of pounds. For this huge amount of money we need to see a legacy system ready to deliver when needed but it’s just not clear what there will be to show in the long term. This legacy has to be a focus for government if we are to see any value for the money spent.”
In better news: “More than 80,000 young people aged 12 to 15 have booked their COVID-19 vaccination since online bookings opened just four days ago,” NHS England announces this morning. Dr Nikki Kanani, GP and deputy lead for the NHS vaccine program, says: “It’s really important that we keep that momentum going if we want to ensure children get to stay in the classroom with their classmates this winter so if you’re thinking about getting your child vaccinated, I would encourage you to head online and look at the information.”
New age of optimism latest: The FT’s Seb Payne reckons “the mood has shifted in Whitehall” as COVID cases appeared to fall week on week, with one source telling him they think there’s now only a 20 percent chance the government will have to move to its Plan B. Playbook’s story yesterday on the doubts and economic costs of Plan B is followed by a clean sweep of the FT, Times, Telegraph, Guardian, Sun, Mirror, the i, Express and the Standard.
Plan B for schools: Strong story from the Sun’s Kate Ferguson, who reveals pupils are once again likely to be ordered to wear face masks in communal areas.
Which brings us to … An email went round the Commons yesterday advising that face masks are now mandatory on the parliamentary estate for all staff, contractors and press. My POLITICO colleague Esther Webber has got hold of it, along with the previous guidance issued only last Wednesday, which informed staff: “It is up to us all to exercise our own personal responsibility.” Yesterday’s email says: “All face-to-face meetings with colleagues should be avoided, unless there is a business need.” It also specifies colleagues should “avoid sitting directly opposite each other” and “avoid close contact at all times.”
One rule for them latest: The ridiculously glaring omission here is that MPs are still not required to wear masks. Technically, it’s unclear how they could be obliged to do so, since they are not employees, but trade unions have long made the point this doesn’t stop the speaker enforcing the dress code or speaking conventions. The new guidance will also raise the question of why similar rules are not being recommended for other workplaces.
What changed? The parliamentary authorities would not comment on any specific advice which had led to the update, but confirmed there had been an uptick in cases on the estate. A House of Commons spokesman said: “The House’s priority is to ensure that those on the estate are safe while business is facilitated. Due to recent increases in COVID-19 across the country, which are also being reflected in parliament, we have updated our COVID-19 guidance for those working on the estate.”
Concerning story … from the Guardian’s Jess Elgot and Linda Geddes, who report: “Pregnant women are being turned away from Covid vaccine clinics despite clinical advice … New data from Oxford University’s MBRRACE-UK study on maternal health, seen by the Guardian, shows that at least 13 pregnant women died with Covid between July and September this year, with 85% of them believed to have been unvaccinated. The figure is higher than in the first and second waves of the pandemic, when nine and 11 pregnant women died but when jabs were not available.”
YESTERDAY’S UK COVID STATS: 40,954 new cases, ⬆️ 4,387 on Monday. In the last seven days there have been 312,914 positive cases, ⬇️ 1,317 on the previous week … 263 reported deaths within 28 days of a positive test, ⬆️ 225 on Monday. In the last seven days 982 deaths have been reported, ⬆️ 71 on the previous week. As of the latest data 8,693 COVID patients are in hospital.
VAX STATS: A total 49,753,040 people or 86.5 percent of the population aged 12+ have received a first dose, ⬆️ 37,809. A total 45,582,890 people or 79.3 percent of the population aged 12+ have received a second dose, ⬆️ 21,446 … A total 6,442,000 people or 11.2 percent of the population aged 12+ have received a booster/third dose, ⬆️ 244,992.
**POLITICO Pro’s policy expertise can help you navigate the new British political landscape. Discover more about Pro here**
TODAY IN WESTMINSTER
HOUSE OF COMMONS: Sits from 11.30 a.m. with Northern Ireland questions followed by PMQs at noon … and then the budget will dominate the rest of the day until 7 p.m.
4 DAYS TO GO: The queen is out of COP, and now the government’s target of keeping the 1.5C temperature rise alive next week. A new report from the U.N. warns the world faces a disastrous 2.7C rise if countries don’t strengthen their climate pledges. The Guardian splashes the story.
Please no: The Telegraph’s Lucy Fisher has some terror-inducing polling showing 42 percent of the British public want a referendum on the government’s net-zero pledges.
WANJIRU CASE LATEST: Labour’s Shadow Defense Secretary John Healey has written to his opposite number Ben Wallace about the Sunday Times revelations on the killing of 21-year-old Agnes Wanjiru in Kenya. Among the questions Healey asks Wallace: “Can you provide reassurances that those service personnel involved, both in the crime itself and the chain of command, are not actively serving and if so whether they will be suspended while these allegations are investigated? … Will you launch a further MOD-led investigation into allegations that this horrific killing was covered up by the chain of command, despite it being reported by fellow soldiers at the time and being an ‘open secret’ within the regiment?”
PATERSON SCANDAL: Former Tory Cabinet Minister Owen Paterson faces a 30-day Commons suspension and a recall petition after he was found guilty by the parliamentary watchdog of an “egregious” breach of lobby rules over his paid work at Randox Lynn’s Country Foods. Paterson yesterday accused the watchdog of being partly to blame for his wife’s death. This all looks like it’s coming to an unsavory vote in the Commons next week. The Times‘ Henry Zeffman and Oli Wright have a detailed write-up.
CLEANING UP: The government has partially U-turned over the sewage vote debacle, requiring firms to show a reduction in sewage overspills. POLITICO’s Esther Webber has the story.
STEADY ON: Times has (another) intriguing piece about Foreign Secretary Liz Truss, hailing her as a “style influencer,” coining the term “Lizmania” and asking “is Downing Street next?”
BUSY COMMITTEE CORRIDOR: The joint committee on the draft Online Safety Bill hears from Rappler CEO Maria Ressa (9 a.m.) … The education committee questions Universities Minister Michelle Donelan (9.30 a.m.) … New Trade Secretary Anne-Marie Trevelyan is up at the international trade committee to discuss CP preparations (10 a.m.) … The Lords constitution committee questions SDLP leader Colum Eastwood on the governance of the U.K. (10 a.m.) … Home Secretary Priti Patel has a session at the Lords justice and home affairs committee (10.30 a.m.) … Northern Ireland Secretary Brandon Lewis will be explaining his controversial proposals to address the legacy of the Troubles at the Northern Irish affairs committee (2.30 p.m.) … The women and equalities committee questions EHRC Chair Kishwer Falkner (2.30 p.m) … and the Lords international relations committee will quiz Defense Secretary Ben Wallace on his brief (3 p.m.). Full list here.
HOUSE OF LORDS: Sits from 3 p.m. with questions on climate change, social care and vaccinations administered abroad … The main business will be the third day of the Police, Crime, Sentencing and Courts Bill’s committee stage.
MEANWHILE IN COP CHAOS: The Scottish government and the ScotRail train operator have given the RMT rail union until 5 p.m. today to accept a pay offer that would avert train strikes for the duration of COP26. Noises from both camps are sounding increasingly resigned to no deal being struck and the potential chaos of strikes throughout the summit, culminating in Scotland’s Transport Minister Graeme Dey telling the BBC yesterday the “signs are not optimistic.” For its part, RMT said today’s deadline amounts to having a “gun pointed at your head” — which doesn’t look to Playbook like the language of a union preparing to back down. The Scotsman’s Transport Correspondent Alastair Dalton has a great explainer on the saga and what it means for your COP traveling experience.
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MEDIA ROUND
Tory MP Robert Jenrick broadcast round: Sky News (7.05 a.m.) … Times Radio (7.20 a.m.) … talkRADIO (8.33 a.m.).
Shadow Chief Secretary to the Treasury Bridget Phillipson broadcast round: ITV GMB (6.50 a.m.) … BBC Breakfast (7.30 a.m.) … Sky News (8.05 a.m.) … Times Radio (8.35 a.m.).
Also on BBC Breakfast: SNP Treasury spokesperson Alison Thewliss (6.50 a.m.).
Also on Good Morning Britain (ITV): Royal commentator Dickie Arbiter (6.30 a.m.) … Insulate Britain spokesperson Tracey Mallaghan (7.20 a.m.).
Also on Sky News breakfast: Former Shadow Chancellor Rachel Reeves (7.30 a.m.) … Royal biographer Angela Levin (7.40 a.m.) … SNP Treasury spokesperson Alison Thewliss (8.40 a.m.).
Nick Ferrari at Breakfast (LBC): Former adviser to Sajid Javid Tim Pitt (7.20 a.m.) … Tory peer David Freud (7.40 a.m.) … Public Accounts Committee Chair Meg Hillier (8.05 a.m.).
Also on Times Radio breakfast: Christine Colvin from the Rivers Trust (7.30 a.m.) … IFS Deputy Director Carl Emmerson (8 a.m.).
Also on talkRADIO breakfast show: Tory MP Tim Loughton (7.20 a.m.) … Public Accounts Committee Chair Meg Hillier (7.33 a.m.) … Former Education Secretary Justine Greening (8.05 a.m.) … Tory MP Richard Graham (9.05 a.m.) … Former head of U.K. Border Force Tony Smith (9.33 a.m.).
Politics Live (BBC Two 11.15 a.m.): Former Shadow Chancellor John McDonnell and Tory MP Steve Baker (pre-budget) … Chief Secretary to the Treasury Simon Clarke … Shadow Chancellor Rachel Reeves … IFS Director Paul Johnson … Lib Dem leader Ed Davey … SNP Treasury spokesperson Alison Thewliss.
Cross Question with Iain Dale (LBC 8 p.m.): Former Bank of England official Ian McCafferty … Netwealth Chief Economic Strategist Gerard Lyons … The Institute for Public Policy Research’s Carys Roberts … Finance writer Anne Ashworth.
Peston (Twitter 9 p.m. and ITV 10.45 p.m.): Chancellor Rishi Sunak … Shadow Chancellor Rachel Reeves … Former Shadow Chancellor Ed Balls … Former Chancellor Ken Clarke.
Reviewing the papers tonight: Sky News (10.30 p.m. and 11.30 p.m.): Columnist Carole Malone and Editor of the Courier David Clegg … Times Radio (10.30 p.m.): Tory MP Andrew Bowie and Labour MP Angela Eagle.
TODAY’S FRONT PAGES
(Click on the publication’s name to see its front page.)
Daily Express: Rishi — Our new age of optimism.
Daily Mail: Queen’s ‘regret’ as now she quits climate summit.
Daily Mirror: Tired queen pulls out of summit.
Daily Star: Who do you think you are kidding Mrs Lumley.
Financial Times: China locked out of nuclear plants in new funding model.
HuffPost UK: U-turn on raw sewage dumping after outrage.
i: Queen pulls out of COP26 on doctors’ advice.
Metro: Rishi’s new age budget — He’s even got the sandals to help him.
POLITICO UK: Rishi Sunak tries to have it both ways as U.K. budget looms.
The Daily Telegraph: Test & Trace criticized as ‘eyewatering’ waste of cash.
The Guardian: ‘A thundering wake-up call’ — World faces 2.7C temperature rise, says U.N.
The Independent: Ministers put off COVID decisions for two weeks.
The Times: Fast growth gives Sunak chance to splash cash.
LONDON CALLING
WESTMINSTER WEATHER: ☁️☁️☁️ Breezy, cloudy and overcast. Highs of 18C.
SPOTTED: At the Westminster Kebab Awards last night … Education Secretary Nadhim Zahawi … former Labour leader Jeremy Corbyn … Labour’s Rosena Allen Khan … Abena Oppong-Asare … Rupa Huq … Barry Gardiner … Lloyd Russell-Moyle … Toby Perkins … Tories Paul Scully … Dehenna Davison and Matt Warman … Lib Dem leader Ed Davey … Unite’s Len McCluskey … Tory aides Harriet Smith … Rhiannon Padley … Cameron Brown … Hugh Bennett … Sadiq Khan advisers Sarah Brown and Sarah Coombes … Tory strategist Isaac Levido … hacks Stephen Bush … Katy Balls … Tony Diver … Barbara Speed … David Wooding … Cat Neilan … Richard Vaughan … Alain Tolhurst … Sophie Morris … Alex Rogers … Ned Simons … Ben Kentish … Josiah Mortimer … and Opinium’s Chris Curtis.
CALLING ALL PARLIAMENT DWELLERS: Nominations for the House magazine’s Parliament’s People Awards close at the end of this week. If you haven’t already nominated an outstanding staffer or parliament worker you can do so here.
BIRTHDAYS: Daily Telegraph owner Frederick Barclay … Crime and Policing Minister Kit Malthouse … Shadow International Trade Minister Bill Esterson … Tory Peer Simon Wolfson … Labour peer Frederick Ponsonby … The Economist’s Tom Nuttall.
PLAYBOOK COULDN’T HAPPEN WITHOUT: My editor Zoya Sheftalovich, reporter Andrew McDonald producer Grace Stranger.
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Alex Wickham
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