Labour criticise 'omnishambles' Spring Budget as IFS accuse both main parties of ‘conspiracy of silence’ over public spending

The Chancellor’s Spring Budget has been met with a mixed response.

Shadow chancellor Rachel Reeves has claimed Jeremy Hunt delivered an “omnishambles” Budget after think-tank analysis painted a sobering picture of the nation’s finances.

Chancellor Jeremy Hunt delivered the Budget on Wednesday in which he announced a 2p cut to National Insurance. However, economists have now suggested it will do little to impact a dramatic collapse in living standards over the next few years.

It comes as the Institute for Fiscal Studies (IFS) accused both the Conservatives and Labour of being engaged in a “conspiracy of silence” about public spending after the looming general election. The respected think-tank’s analysis comes just hours after the Resolution Foundation found despite the Spring Budget, taxes were still going up while living standards fell.

Jeremy Hunt has been accused of using "smoke and mirrors" in the Spring Budget.

Opening day two of the Budget debate, Ms Reeves said: “They’re giving with one hand and taking twice as much with the other. The stark reality of yesterday’s Budget is clear – taxes rising, living standards falling, growth stalling and yet again making promises they can’t deliver.

“The Tories have failed on the economy. They are out of ideas and they are out of time.”

Ms Reeves criticised the Chancellor for floating the prospect of ending National Insurance altogether, saying: “In what seemed to be a casual afterthought, the Chancellor has made a £46 billion unfunded commitment, leaving a gaping hole in the public finances; even bigger than the unfunded tax cuts announced in the Tory kamikaze mini budget just 18 months ago.”

Ms Reeves questioned how such a policy would affect borrowing and public spending, adding: “Or has he simply found the same magic money tree that his predecessor was so found of?

“This is an omnishambles Budget from a desperate Tory party. Instead of recklessness, Labour will take a different approach. As chancellor, I will never make a commitment without saying where the money will come from.”

Mr Hunt conceded on Thursday the aim to end National Insurance would not happen “any time soon”.

Earlier IFS director Paul Johnson claimed Mr Hunt had not been transparent about the challenges facing the UK, and not set out the significant cuts to public spending that would be required after the election.

The prospective cuts are needed to ensure the government meets its fiscal rule to have debt falling in five years’ time, and involve cutting spending on unprotected departments – including courts, prisons and local councils – by around £20bn, and cutting public investment by £18bn a year in real terms.

They also assume the “temporary” freeze on fuel duty will end, something that has not happened in the past 15 years.

Mr Johnson said: “Maybe that is possible, but keeping to these plans would require some staggeringly hard choices, which the government has not been willing to lay out. Indeed, we heard yesterday that the next spending review, in which these choices will have to be announced, will rather conveniently not happen until after the election.

“One only has to look at the scale of NHS waiting lists, the number of local authorities at or near bankruptcy, the backlogs in the justice system, the long-term cuts to university funding, the struggles of the social care system, to wonder where these cuts will really, credibly come from.”

While he was doubtful the Conservatives would deliver their existing spending plans, Mr Johnson also expressed scepticism that Labour would oversee significant cuts to public spending if it won the election.

He said: “Government and opposition are joining in a conspiracy of silence in not acknowledging the scale of the choices and trade-offs that will face us after the election. They, and we, could be in for a rude awakening when those choices become unavoidable.”

The Resolution Foundation separately found the Spring Budget would leave those earning £19,000 or less worse off, while middle earners – those on salaries between £26,000 and £60,000 – will see their personal tax bills fall.

Chief executive Torsten Bell said: “A pre-election budget produced another round of pre-election tax cuts. To deliver them, the Chancellor has continued to throw fiscal caution to the wind, cutting his fiscal headroom to just a third of the average level seen since 2010. He would fail to meet three out of the four sets of fiscal rules used by his Conservative predecessors since 2010.

"Britain remains a country where taxes are heading up not down, rising by the equivalent of £3,900 per household, and where incomes are set to remain below their level at the last general election when voters return to the polls.”

First Minister Humza Yousaf said the £237 million coming to Scotland in Barnett consequentials following the Chancellor’s Budget was “nowhere near enough”. He claimed the cut to National Insurance and the Autumn Statement last year would mean £1.6 billion less in “potential consequentials” for Scotland.

The Scottish Government had also been hoping for capital funding to flow from the Budget, with Deputy First Minister Shona Robison saying a cut in the Scottish housing budget of more than £200m would be first to be reversed if extra money became available.

Earlier on Thursday, Alyson Stafford – the director-general of the Scottish Exchequer – said there would be no capital consequentials coming to Scotland as a result of the Budget, and total funding would drop by 8.7 per cent in real-terms by 2026/27.

Mr Yousaf declared: “The absence of investment in public services and infrastructure is nothing, frankly, short of a betrayal of our public services by the UK government.”

The SNP responded to the figures by claiming independence was Scotland's only route back to sustained economic growth.

Richard Thomson, the SNP trade and business spokesperson, said: "Brexit has been a disaster for Scotland – and the OBR [Office for Budget Responsibility] analysis shows it continues to blow a massive hole in the UK economy, costing Scotland billions of pounds in lost trade, investment and economic growth.”