The higher education secretary described the suggestion that the chancellor’s mini-budget would be a “trickle-down economy” as left-wing “nonsense”.
Simon Clarke made the comments ahead of a tax cut budget to be announced on Friday.
The right-wing economic theory that tax cuts for businesses and high earners will allow benefits to ‘trickle down’ into the pockets of the poorest became political football this week as the Prime Minister pushes through tax cuts.
Though it’s been dubbed a “mini” budget, Friday’s announcements are expected to be far-reaching. Despite this, the plans have not been subjected to the usual analysis by the Office of Budgetary Responsibility.
When asked about it, Clarke said the OBR said it was too short notice to complete “the usual quality of analysis that they would offer”. He later implied it hadn’t been asked to, saying, “You are being asked to do this modeling along with subsequent events later this fiscal year.”
The latest dig at the “trickle-down economics” comes after US President Joe Biden said he was “weary and sick of politics” ahead of his first bilateral talks with Liz Truss in New York earlier this week. that it “never worked”.
Clarke told Sky News just before the budget on Friday morning: “This whole term trickle-down is such nonsense and itself a centre-left mischaracterization of what this government is about. We need to let the economy grow because a better economy is good for everyone.”
The Leveling Up Secretary said he wants to see growth return to pre-crash levels and Friday’s announcements would go much further than the much-hyped scrapping of the national insurance hike.
Clarke said the chancellor would say a more prosperous economy has created a “virtuous circle” with more resources flowing into public services.
Pat McFadden, the Treasury Department’s shadow executive secretary, said the expected announcements were not in fact a growth plan.
“As it stands today, the government is playing a huge game with public finances by taking a number of measures and going all-in on credit and calling it a growth plan,” he told BBC Breakfast.
McFadden echoed Labor’s call for another unexpected tax on oil and gas companies and said the government appeared not to be trying to collect any revenue.
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“This isn’t really a growth plan, it’s a return to a very old Tory policy based on the belief that if you make those who are already rich even richer, it will trickle down to the rest of us.”
He said that “flip-flops and chaos” are a threat to stability, adding: “It will be the third Social Security change in six months. It’s the legal equivalent of digging a hole and backfilling it.”
Clarke, who was formerly chief secretary of the Treasury Department, also defended his decision to change his position in favor of reversing Social Security growth.
“I have served the Government of the day and with a new Prime Minister comes new prerogatives – but to be clear, we will stand behind the investments in our NHS and social care announced by Boris Johnson as Prime Minister. We will only pay for it through general taxation and not through a specific levy,” he told Sky News.