Ministers from Scotland, Wales and Northern Ireland warn ‘huge gamble’ on tax breaks could mean major spending cuts
Devolved governments leaders have demanded an urgent meeting with chancellor Kwasi Kwarteng over his “disastrous” mini-Budget and fears of new age of austerity.
The finance ministers of Scotland, Wales and Northern Ireland warned that the Liz Truss government’s “huge gamble” on borrowing-fuelled tax cuts will mean a decade of spending cuts.
In a joint letter they shared their alarm over reports that all government departments would be asked to make cuts – pointing out that devolved budget settlements have already been diminished by inflation.
The senior devolved ministers said “the largest set of unfunded tax cuts for the rich in over 50 years” had led to “a huge gamble on public finances and the health of our economy”.
It comes a Ms Truss’s key cabinet ally Simon Clarke suggested that the government was exploring ways to shrink the size of the “extremely large” state.
The levelling up secretary signalled welfare cuts on the way, revealing that the government wanted to make sure the size of the state was aligned to a low-tax economy.
Mr Clarke said Britons and others in western Europe were living in a “fools’ paradise” in which they enjoy a “very large welfare state” despite sluggish economic productivity.
Welsh secretary Robert Buckland also pointed to a spending squeeze, as the government looks to reassure markets it can balance the books after a week of turmoil.
“We intend to be extremely rigorous when it comes to bearing down on public expenditure,” Mr Buckland told Sky News on Saturday – saying there would be announcements on spending in the weeks ahead.
The government is on course to make public spending cuts of almost £50bn a year after the “unenforced error” of Mr Kwarteng’s mini-Budget, according to the Resolution Foundation think tank.
Ms Truss has refused to commit to the annual uprating of benefits in line with inflation in April – something Rishi Sunak had promised to do when he was chancellor.
Some Tory MPs have predicted that Ms Truss would struggle to push real-terms cuts to benefits through the Commons.
Robert Largan, Tory MP for High Peak, tweeted: “This is untenable. You cannot freeze benefits and pensions while cutting taxes for millionaires. A debt reduction plan needs to be both economically and politically sustainable to be credible.”
Some uneasy Tory rebels are also keen reverse Ms Truss’s axing of the 45p tax rate. Some backbenchers have to reportedly start talks with Labour about moves to vote it down in the Commons. “It is not all [the] usual suspects,” one figure involved told The Times.