Sunak signals austerity lite

Labour needs a comprehensive alternative vision

Rishi Sunak has spilled the beans to the Sunday Times on the tax-raising measures he plans for this week’s Budget. The details mean the Labour leadership and the left should stop arguing about corporation tax and start arguing with the British people about an alternative.

Sunak further stimulus plans include:

• £15bn to extend furlough, VAT exemptions etc until the end of June
• £22bn capital/guarantees for national infrastructure bank
• £5bn in grants to small businesses hit by the lockdown
• a £94bn “green savings bond” to raise money targeted at offshore wind, energy storage etc

But the payload of the Budget leak is a set of tax raising measures backed by an argument. Before it thinks about opposing the tax raising measures, Labour has to think about defeating the argument.

The argument is that we have to stabilise debt at 100% of GDP, by either cutting £43 billion from regular public spending — 2% of GDP — or raising the equivalent in tax. The rationale for the argument, boosted as usual by the neoliberals at the Institute for Fiscal Studies, is that a debt/GDP ratio of 100% risks Britain being engulfed by rising interest payments, as the…