Budget ‘a downpayment on reform and growth’, says Chief Secretary to the Treasury

We’re joined by Darren Jones, the Chief Secretary to the Treasury.

Krishnan Guru-Murthy: It’s not quite Liz Truss, but you spooked the markets a bit. Borrowing costs are going up for the government and we are going to be saddled with lots of debt at high costs.

Darren Jones: This is nothing like Liz Truss, Krishnan, come on.

Krishnan Guru-Murthy: Well, I said it’s not Liz Truss.

Darren Jones: I’m glad you agree. Look, markets always respond to budgets. That happens every single time a chancellor stands up and announces new information to the market. That’s what you would expect. But what markets will welcome, I am sure, is the fact that we’ve put strong fiscal rules in place, our stability rule around day to day spending being met by tax receipts and our investment rule, that means, yes, we are investing in our country because that’s the right thing to do. But the burden of debt will be falling over the forecast period of the five years ahead.

Krishnan Guru-Murthy: But for working people, as you like to refer to, we’re looking at higher interest rates, lower wages because the OBR is very clear that the national insurance rise for employers will be passed on in the most part to people’s pay packets and huge amounts of debt in the future. I mean, this is not a great vision for the future. If you’d have gone to the country earlier in the year and put that in your election manifesto, you’d be the second interview on tonight, not the first.

Darren Jones: Let’s take the pay slips and the inflation bit from your question and deal with both of them in turn. On payslips, we made a very clear commitment to the British people at the last election not to increase income tax or national insurance as well as VAT. That is a promise that we have honoured today. Working people have been protected and they will see that in their payslip, not just this month and next month, over every single month before the next election.

Krishnan Guru-Murthy: But the OBR is clear that they will see in their pay slip lower wages as a result of employers’ national insurance going up.

Darren Jones: We have protected taxes on working people. That is a promise we made. It is a promise that we have delivered. People will feel that and see that each and every month.

Krishnan Guru-Murthy: You stuck to that particular promise. But it doesn’t mean that people won’t feel the pain of those tax rises in their payslips. They will. And they’ll have higher borrowing costs, higher mortgage costs. I mean, these are all things that will affect ordinary working people. And I thought you were going to stop the pain for working people.

Darren Jones: This is a budget that protects working people. The taxes we’ve just talked about, let’s go to inflation, which we didn’t manage to get to. Inflation under the Conservatives peaked at nearly 11.5% because of the misbehaviour of people like Liz Truss and Kwasi Kwarteng. The OBR forecast today are very clear that inflation, yes, goes up a bit because of energy bills and some other factors, but it is coming towards target at 2%. That is the right trajectory. That is something that we will continue to deliver for this country. But let’s take the cost of living more generally for people. And if people want an economy that is growing and they want public services that are working and they want the government to have a grip on public finances, that’s exactly what this budget is doing today.

Krishnan Guru-Murthy: You see, growth by the end of this parliament is going to be hovering at around 1.5%. That’s not the sort of the growth-growth obsession that most people would have expected. Shouldn’t we be expecting more?

Darren Jones: This is the first budget of our Labour government. Do we want more growth? Absolutely we do. How many times have I been on your show in the past few years, when the last Conservative government was celebrating growth of 0.1%, 0.2%? How many times did the economy tip into recession? I think three times over the last few years. On the OBR forecast today, they’ve got the economy growing year after year after year in this forecast with extra growth in the ten year forecast. That is good for the country.

Krishnan Guru-Murthy: So the truth is, everything is riding on public services. You’re putting £22 billion into the NHS, which is a huge number. But the truth is most of that is going to be absorbed in higher staff costs. And the actual rise takes us back to sort of traditional rises from before the Conservatives took annual rises right down. Isn’t the transformation that’s required in the NHS now much, much greater? I mean, there’s a danger that you don’t really deliver transformation by the end of this parliament?

Darren Jones: Look, the big decision that we’ve taken at this budget is to choose investment over decline. We could have continued with the spending plans of the last government, which would have been more decline.

Krishnan Guru-Murthy: But is it enough?

Darren Jones: Or we could have turned the corner on investment within our fiscal rules with guardrails in place, taking a risk-based approach to the economic situation we find ourselves in. £100 billion of extra public sector investment over the next five years is a lot of public sector investment. But you are right that reform has to come alongside that money. You can’t just keep raising money and spending on poor performing public services. You have to modernise and improve the delivery of those public services as well. That will be the big test for us in the years ahead.

Krishnan Guru-Murthy: But a lot of NHS and health economists are very sceptical that this is actually enough to transform the NHS. You’re putting this all on Wes Streeting now and saying, well, you’ve got to do it.

Darren Jones: Wes will be the first to come on your show and tell you how he plans to reform the NHS, much like Bridget Phillipson with the school system, or Shabana Mahmood with the prison system, or Angela Rayner with housing and councils. All of our public services are poorly performing because of the inheritance of the last 14 years. This budget is a down payment on reform and down payment on growth. But absolutely, we’ve got to do the hard yards now in the years ahead, and that’s what we’re going to do.

Krishnan Guru-Murthy: We do know the answer to the question I’ve been asking you for about a year now, which is about unprotected departments, which is that they will feel the squeeze, won’t they? I mean, there could be job losses, there could be cuts.

Darren Jones: The spending plans that we inherited from the last Conservative government, where they existed, were real-terms cuts for departments. That is not what this budget’s delivered. We are not going back to austerity. Again that was a promise that we have delivered as a Labour government. But look, is there as much money as everyone would want? Of course not. But that’s why the reform agenda is so important. We have to make sure that every single pound of taxpayers’ money is being spent well.

Krishnan Guru-Murthy: But if you’re in the Home Office or Defra, you know, you’re looking at numbers going, I don’t quite know how we’re going to do this without cuts.

Darren Jones: While all of the departments got a comparatively big uplift in the spending settlement today, largely to deal with the £22 billion black hole that we inherited from the last government, to make sure that those budgets and the slate is kind of clean from our inheritance from the Tories. But now we’ve got to face the future and deliver on our promises, and that’s what we’re going to do.