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Javid fails to disguise cynical electioneering behind spending review Javid fails to disguise cynical electioneering behind spending review
(about 4 hours later)
It should have been a breeze for Sajid Javid. The new chancellor had money to spend. He was primed to announce that the years of austerity were over. After years of belt-tightening, it was the easiest of gigs. Yet somehow he managed to muff it.It should have been a breeze for Sajid Javid. The new chancellor had money to spend. He was primed to announce that the years of austerity were over. After years of belt-tightening, it was the easiest of gigs. Yet somehow he managed to muff it.
Javid’s job was relatively simple. He had to announce big increases in the budgets for the NHS, education, the police and public investment, while insisting he was not engaged in a cynical, pre-election ploy.Javid’s job was relatively simple. He had to announce big increases in the budgets for the NHS, education, the police and public investment, while insisting he was not engaged in a cynical, pre-election ploy.
MPs have backed the motion to allow a debate on a bill that would prevent a no-deal Brexit. In return, prime minister Boris Johnson says he will seek to hold an election, and will table a motion under the Fixed-term Parliaments Act. MPs will probably vote on this around 10pmMPs have backed the motion to allow a debate on a bill that would prevent a no-deal Brexit. In return, prime minister Boris Johnson says he will seek to hold an election, and will table a motion under the Fixed-term Parliaments Act. MPs will probably vote on this around 10pm
Johnson had asked the Queen to prorogue parliament during this week. MPs were due to have a recess period anyway for the party conference season. If the prime minister gets his way, instead parliament may be dissolving for a snap election. Johnson had asked the Queen to prorogue parliament during this week. MPs were due to have a recess period anyway for the party conference season. If the prime minister gets his way, instead parliament may be dissolving for a snap election. 
The Labour and Conservative party conferences are due to be held on consecutive weeks - although MPs may be out campaigning instead.The Labour and Conservative party conferences are due to be held on consecutive weeks - although MPs may be out campaigning instead.
This is the date that Johnson was proposing parliament returns for the Queen’s speech setting out a legislation programme for his government.This is the date that Johnson was proposing parliament returns for the Queen’s speech setting out a legislation programme for his government.
The date on which the prime minister is suggesting a general election would be held if MPs vote to prevent a no-deal Brexit.The date on which the prime minister is suggesting a general election would be held if MPs vote to prevent a no-deal Brexit.
EU leaders meet for the final European council summit before the UK's extension is due to expire. They could possibly agree a new deal at this point - with just about enough time for Johnson, or whoever is prime minister by then, to try and get it through parliament.EU leaders meet for the final European council summit before the UK's extension is due to expire. They could possibly agree a new deal at this point - with just about enough time for Johnson, or whoever is prime minister by then, to try and get it through parliament.
The six-month article 50 extension will expire, and current prime minister Boris Johnson has pledged that the UK will leave the EU with or without a deal on that date.The six-month article 50 extension will expire, and current prime minister Boris Johnson has pledged that the UK will leave the EU with or without a deal on that date.
Javid spectacularly failed to manage this. His announcement was so loaded with political attacks on Labour that he was twice upbraided by the Speaker for failing to keep to the parliamentary rules. And it was so leaden that at times it was excruciating to watch. Javid spectacularly failed to manage this. This was the first time since 2002 that no government department had seen its budget cut. The 4.1% increase in day-to-day spending was the biggest in 15 years. There was an extra £1.8bn for schools, an additional £1bn for councils ring-fenced for social care, £750m to kickstart the process of employing an extra 20,000 police officers.
That is not to say the spending statement was devoid of content. Far from it. This was an important occasion, if only because it lays bare what Boris Johnson’s government is up to. All this was supposed to signal that the days were over when Tory chancellors had to button up a hair shirt before announcing their spending plans. Yet Javid’s statement was so loaded with political attacks on Labour that he was twice upbraided by the Speaker for failing to keep to the parliamentary rules. And it was so leaden that at times it was excruciating to watch.
As a result of the continued uncertainty over Brexit, the Treasury thought it wise to have a one-year spending review for 2020-21 rather than the three-year round it would have preferred. That is not to say the spending statement was devoid of content. Far from it. Javid is using the fall in long-term interest rates around the globe to justify spending and borrowing more, something his political opponents have long been advocating. The intellectual u-turn comes at a convenient time, when Boris Johnson is trying to show he has a post-Brexit plan that involves a break with the past. The UK’s experts on the public finances, the Institute for Fiscal Studies, think the break with austerity might prove temporary.
Javid was working under spending strictures inherited from his predecessor, Philip Hammond, under which the government had to keep the budget deficit when adjusted for the state of the economy below 2% of GDP in 2020-21. Javid was working under spending strictures inherited from his predecessor, Philip Hammond, under which the government had to keep the budget deficit, when adjusted for the state of the economy, below 2% of GDP in 2020-21.
On current forecasts the government will meet this target with plenty to spare – leaving about £15bn of leeway. Javid’s decision to boost day-to-day spending by £13.8bn this year and next means nearly all the additional spending power has been used up. On current forecasts the government will meet this target with plenty to spare – leaving about £15bn of leeway. Javid’s decision to increase day-to-day spending by £13.8bn between 2019-20 and 2020-21 means nearly all the additional spending power has been used up but will boost growth by 0.3%
What is more, the forecasts Javid is using date back to March, since when the economy and the public finances have deteriorated. In the budget later this autumn – assuming he is the chancellor delivering it – Javid will have to come up with some softer fiscal rules. The forecasts Javid are using date back to March, since when the economy and the public finances have deteriorated. In the budget later this autumn – assuming he is the chancellor delivering it – Javid will have to work with new, gloomier forecasts produced by the government’s independent forecaster the Office for Budget Responsibility. These will leave him with a choice: be less generous than he is planning or come up with some softer fiscal rules. Javid favours the latter option. A further easing of fiscal policy looms.
But that is for the future. The spending statement – as the shadow chancellor, John McDonnell, rightly identified – was designed to meet the concerns of voters as expressed in opinion polls and focus groups, and to win a snap election. But that is for the future. The spending statement – as the shadow chancellor, John McDonnell, rightly identified – was designed to meet the concerns of voters as expressed in opinion polls and focus groups. There is an election to fight first.
Spending review 2019Spending review 2019
Economic policyEconomic policy
Sajid JavidSajid Javid
AusterityAusterity
EconomicsEconomics
analysisanalysis
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