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27 October 2022

Who will bear the brunt of Rishi Sunak’s austerity?

At his first PMQs as leader, Sunak successfully evaded questions on where cuts will fall.

By Freddie Hayward

Many welcomed Rishi Sunak’s first performance at Prime Minister’s Questions yesterday as the most rigorous display in years. Yet it was anything but. Sunak didn’t answer a single question from Keir Starmer. He lent on trite jibes to disguise his evasive answers, giddy at the prospect of making his backbenchers cheer.

That is partly the point of PMQs: to reassure your backbenchers and deny the opposition the chance to set the narrative. But, importantly, Sunak’s indirect style – contrasted with Liz Truss’s occasional attempt to defend her policies – means the impending austerity package might not get the attention it deserves. (The medium-term fiscal statement – renamed the “Autumn Statement” – has been pushed back three weeks to allow the new PM to decide how to fill a £35bn shortfall.)

That matters because cuts to public spending – and importantly, public investment – can dampen economic growth and diminish people’s livelihoods. Senior economists set out why a return to austerity post-Covid would be ill-advised in this brilliant symposium we ran in 2020. The Institute for Government has also published a new report with all the relevant statistics here. As Andrew writes in his column this week, “these are moral choices”.

So where will the cuts fall? Beyond briefings in the papers, that’s not yet clear. In 2010, George Osborne said deficit reduction would follow an 80:20 rule: 20 per cent through tax rises and 80 per cent through spending cuts. In any case, Sunak can expect strong opposition from his MPs.

What about Labour? The party don’t yet have a detailed tax policy because they say, correctly, they don’t know where the economy will be in two years’ time. However, that leaves them exposed. Confusion over whether the party supported Kwasi Kwarteng’s cut in the basic rate of income tax was eclipsed by the noise surrounding the mini-Budget. Starmer won’t have that luxury this time round. Politically, Labour can use the Autumn Statement to link Sunak with the austerity of the Cameron government. But they will need to decide what the alternative is first.

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Who bears the brunt of these cuts is the key political question for the next few weeks – even if it doesn’t get mentioned at PMQs. 

[See also: Rishi Sunak doesn’t “owe” anything to this country just because he has immigrant roots]

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