Rishi Sunak revives Thatcherism to rescue Britain’s economy

PM follows the Iron Lady’s recession playbook of tax hikes and spending cuts (Image: Getty)The PM will warn ‘there is no alternative’ to the eye-watering package of tax hikes and spending cuts to be announced by Chancellor Jeremy Hunt.The phrase was used by Lady Thatcher when she began her battle with inflation in 1980. MPs are braced for cuts to police, education and council budgets to fill a £55billion black hole in public finances. But Mr Hunt, who delivers his autumn statement on Thursday, warned colleagues it is the ‘only way’ to tackle the scourge of inflation.’Iron Lady’ Mrs Thatcher faced a similarly bleak economic outlook, declaring: ‘There is no easy popularity in this, but it’s fundamentally sound.’And last night he compared himself to the character from Charles Dickens’s A Christmas Carol, insisting: ‘I’m Scrooge who’s going to do things that make sure Christmas is never cancelled.’Chancellor Jeremy Hunt will follow in the footsteps of Margaret Thatcher this week and insist ‘there is no alternative’ to huge tax rises and swingeing spending cuts.Backed by Prime Minister Rishi Sunak, he is preparing to pile misery on to voters in Thursday’s Autumn statement with stealth tax increases and cuts to police, education and local council budgets in a package designed to fill a £55 billion black hole in public finances.Conservative MPs say the plans fill them with ‘horror’. But Mr Hunt warned colleagues they are the ‘only way’ to tackle inflation without threatening economic meltdown.Treasury colleague Victoria Atkins last night insisted: ‘We must do this … for the sake of our children and grandchildren.’Ms Atkins, the Financial Secretary to the Treasury, said: ‘There may be no alternative to tough choices but they are the foundation on which we can build a strong and secure future for Britain.’Former Prime Minister Margaret Thatcher famously told critics ‘there is no alternative’ when she introduced tough measures to rebuild the UK’s crumbling economy after becoming Prime Minister in 1979.The Chancellor has told Tory colleagues not to expect ‘good news’ this week but held out hope that measures putting money back into people’s pockets will be announced in the Spring. Rishi and Hunt plan for stealth taxes and spending cuts (Image: Getty)However, Conservative MPs are confident they have won their battle to protect the pensions triple lock, ensuring payments rise in line with inflation.It follows warnings from backbenchers that the Government would face defeat in a Commons vote if it attempted to suspend the guarantee.Tory MPs are also demanding the Chancellor increase benefits, after talk of a freeze sparked concern among those representing ‘red wall’ seats.One said: ‘Many of my constituents work hard and top up their salaries with Universal Credit. For MPs in blue collar constituencies like mine, cutting benefits would be a huge problem.’The outlook for the economy is grim, after it shrunk by 0.2 percent in the three months to September. The UK will officially be in recession if growth falls again in the final three months of the year and the Bank of England has predicted the downturn will last two years.Tories are determined to present a united front following months of civil war. One MP said: ‘We’re all set for a pretty grim budget. The political reality is we need to level with the public about the situation that the world is in.’In an interview last night, Mr Hunt said: ‘I grew up in the 1980s and I saw how Margaret Thatcher changed the course of this country’s history, because she was prepared to take difficult decisions’.The Chancellor said he believed in low taxes but insisted: ‘Sound money has to come first and, you know, Margaret Thatcher said there’s nothing moral about spending money you don’t have.’Confirming there would be no voter-pleasing ‘rabbit in a hat’ in Thursday’s statement, he said: ‘I think it is fair to say this is going to be the first rabbit-free budget for very many years.’He warned that an analysis by the Office for Budget Responsibility, to be published at the same time, was likely to confirm warnings of a long recession. Mr Hunt said: ‘The question is not really whether we’re in recession, but what we can do to make it shorter and shallower.’New polling commissioned by the Liberal Democrats has revealed many voters are terrified the rising cost of living will leave them unable to pay bills, with more than eight in ten people over 55 saying they are worried about heating and energy costs.The survey also found eight in 10 feared being unable to afford everyday goods including food.Lib Dem Work and Pensions spokeswoman Wendy Chamberlain said: ‘Almost all pensioners across Britain are now worried about their bills.’Taming inflation would allow Mr Sunak to revive pledges made during the summer leadership campaign which have been temporarily shelved, such as cutting income tax, cutting VAT charged on household energy bills and extending a temporary 50 per cent reduction in business rates.Tom Clougherty of the Centre for Policy Studies, founded in 1974 by Thatcher’s economic guru Sir Keith Joseph, said: ‘The Government may think that by taking a hard line on the public finances now, they’ll buy themselves space for some giveaways in the spring.’I think that’s a very risky approach. But if it comes off, I’d expect them to focus on cutting the basic rate of income tax. That’s clearly been one of the PM’s ambitions for a while.’But one economist who inspired Thatcher’s policies predicted Thursday’s statement will actually make the recession worse.Prof Patrick Minford said the autumn statement ‘will cause major damage – worsening recession, damaging growth and even raising inflationary wage costs.’Pub and restaurant owners last night warned their businesses will be devastated if Mr Hunt pushes up alcohol duty. Nearly half of adults, 48 percent, would spend less in pubs and restaurants if the government increased tax on alcohol according to a poll by Survation on behalf of the Scotch Whisky Association.Mark Kent, chief executive of the Scotch Whisky Association, said: ‘Pubs, bars and restaurants have been devastated by two years of Covid and are facing huge pressures because of rising costs and the squeeze on household incomes.’We’re urging the Chancellor to help these businesses by freezing alcohol excise duty and ruling out any automatic increase by inflation.’