Thursday, December 8

Saying mini-budget is ‘trickle-down economics’ is leftwing nonsense, says minister | Mini-budget 2022

The leveling up secretary has described the suggestion that the chancellor’s mini-budget will be “trickle-down economics” as leftwing “nonsense”.

Simon Clarke made the comments before a tax-cutting budget to be announced on Friday.

The rightwing economic theory that cutting taxes for businesses and high earners will enable benefits to “trickle down” into the pockets of the poorest has become a political football this week as the prime minister pushes through tax cuts.

Although it has been labeled a “mini” budget, Friday’s announcements are expected to be far-reaching. Despite this, the plans have not been subjected to the usual Office for Budget Responsibility analysis.

When asked about this, Clarke said the OBR had said it was too short a notice for it to complete “the usual quality of analysis that they would offer”. He later implied it had not been asked to do it, by saying: “They will be asked to conduct that modeling alongside subsequent events later in this financial year.”

The latest swipe at “trickle-down economics” comes after the US president, Joe Biden, said in the run-up his first bilateral talks with Liz Truss in New York earlier this week that he was “sick and tired” of the policy and that it had “never worked”.

Clarke said on Sky News shortly before the budget on Friday morning: “This whole term trickle-down is such a nonsense and is itself a centre-left mischaracterisation of what this government is all about. We need to grow the economy because a more successful economy is good for everybody.”

The leveling up secretary said he wanted to see growth return to levels before the 2008 crash and that Friday’s announcements would go much further than the much-trailed scrapping of the national insurance rise.

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Clarke said the chancellor would say that a more successful economy created a “virtuous circle” of more funds going to public services.

Pat McFadden, the shadow chief secretary to the Treasury, said the expected announcements were not in reality a plan for growth.

“What today looks like is the government taking an enormous gamble with the public finances by taking a series of measures and putting it all on borrowing, and calling it a plan for growth,” he said on BBC Breakfast.

McFadden repeated Labour’s call for a further windfall tax on oil and gas companies and said the government did not appear to be going to try to raise any revenue.

“This isn’t really a plan for growth, it is a return to some very old-style Tory polices based on the belief that if you make those who are already wealthy even wealthier it will trickle down to the rest of us.”

He said that the “flip-flopping and chaos” was a threat to stability, adding: “It will be the third change in national insurance in six months. It is the legislative equivalent of digging a hole and filling it back in again.”

Clarke, who was formerly chief secretary to the Treasury, also defended his decision to change his position in support of a reversal of the rise in national insurance.

“I served the government of the day and with a new prime minister comes new prerogatives – but to be clear, we’re going to stand behind the investment in our NHS and social care that was announced by Boris Johnson as prime minister. We’re just going to pay for it through general taxation rather than through a specific levy,” he told Sky News.

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