Boris Johnson must be ‘honest’ with the public about need for austerity, Hammond says

Boris Johnson must be ‘honest’ with the public and ditch big-spending manifesto pledges after Covid, ex-Chancellor Lord Hammond warns – as Tories and Labour threaten to block corporation tax rises

Boris Johnson must be ‘honest’ with the public about the dire state of the public finances after coronavirus and ditch his big-spending manifesto pledges, Lord Hammond warned today.  

The Tory former chancellor urged the PM to tell Britons ‘some difficult home truths’ ahead of next week’s Budget rather than sticking to his ‘populist’ habits.

The peer, a close ally of Theresa May, said the Government must ditch ‘extravagant’ commitments and focus on balancing the books, after racking up massive borrowing during the pandemic.

The comments, in an interview with the BBC, came as Rishi Sunak puts the final touches to his crucial financial package.

He has been dropping heavy hints of a looming reckoning on tax rises, after coronavirus triggered the worst recession in 300 years.

But there are claims today that Tory MPs could join forces with Labour to block any effort to hike corporation tax.

Mr Sunak also faces having to throw billions more at the Covid response, with the massive furlough scheme and other business support set to be extended potentially until June – when the PM’s ‘roadmap’ suggests lockdown will finally be lifted.   

Lord Hammond urged the PM to tell Britons ‘some difficult home truths’ ahead of next week’s Budget rather than sticking to his ‘populist’ habits

Boris Johnson must be 'honest' with the public about the dire state of the public finances after coronavirus and ditch his big-spending manifesto pledges, Lord Hammond warned

Boris Johnson must be ‘honest’ with the public about the dire state of the public finances after coronavirus and ditch his big-spending manifesto pledges, Lord Hammond warned

The UK looks to have avoided a double dip recession but faces a long road to claw back the lost economic activity during the pandemic

The UK looks to have avoided a double dip recession but faces a long road to claw back the lost economic activity during the pandemic

Lord Hammond said he broadly supported financial assistance measures during the pandemic, but remains concerned about Downing Street’s priorities in the future.

‘My fear is that, as a populist government, giving money away is always easier than collecting it in,’ the ex-Cabinet minister said.

‘And the Government will be tempted not to move quickly back to normalising the relationship between government and citizen, the balance between taxing and spending, as we move out of the crisis and into the next phase, which is dealing over the longer term with the legacy of this Covid crisis – what the economists called the scarring effect on the British economy.’

Lord Hammond was appointed to the Lords by Boris Johnson despite being stripped of the Tory whip in 2019 for joining with those attempting to block a no-deal Brexit.

Sir Keir Starmer warned yesterday that now is not the time to be raising taxes on business. 

Mr Sunak is expected to unveil help for motorists, hospitality firms and the housing market in a string of eye-catching policies next week – although there will also be moves to start stabilising the finances.

The Chancellor is set to shelve plans for tax rises, including a threatened 5p increase in fuel duty that would have hit millions of drivers.

The downturn sparked by Covid restrictions last year was the worst since the Great Frost devastated Europe in 1709

The downturn sparked by Covid restrictions last year was the worst since the Great Frost devastated Europe in 1709

He is also poised to announce further VAT and business rate cuts for the hospitality and tourist industries, continue the stamp duty holiday and extend the jobs furlough scheme.

The Mail has revealed that Treasury officials are examining even more dramatic plans for a major stimulus to the economy later this year.

This could include vouchers for high street shoppers and lower alcohol duty for restaurants and pubs battered by coronavirus restrictions until early summer.

The latter move would be coupled with higher levies on supermarket booze to help local traders. A return of last summer’s Eat Out to Help Out scheme is another possibility.

Officials are also said to be examining the case for long-term reform of the stamp duty system because of concerns that it distorts the housing market.