wow, you get to watch all your favorite stuff. it's to die for. now you won't miss a thing. this is the way. the xfinity 10g network. made for streaming. ♪ ♪ ♪ ♪ announcer: funding for presentation of this program is provided by...

woman: a successful business owner sells his company and restores his father's historic jazz club with his son. a raymond james financial advisor get to know you, your passions, and the way you bring people together. life well planned. george: actually, you don't need vision to do most things in life. it's exciting to be part of a team driving the technology forward. i think that's the most rewarding thing. people who know, know bdo. man: cunard is a proud supporter of public television. on a voyage with cunard, the world awaits. a world of flavor. diverse destinations. and immersive experiences. a world of leisure... and british style. all with cunard's "white-star" service.

announcer: funding was also provided by, the freeman foundation. and by judy and peter blum kovler foundation, pursuing solutions for america's neglected needs. announcer: and now, "bbc news" 'n fraser. 'n and this is "the context." >> as conservatives, we believe we bring down the tax burden that will fire up the economy, create more jobs, more money for public services like the nhs. >> the chuckle brothers have declined, and dreaming of santa monica or a quiet life in surrey. >> the economy has been flatlining. as well as the politics are concerned, the conservatives on their polling in the gutter. so no chancellor could hope in one budget to turn both of those

things around. ♪ before a general election.get another cut in national insurance and the surprise change to child benefit for middle learners. was this the game changer conservative backbenchers had demanded? over the next hour, we will do the politics and economics. does it change anything about when the next election will be and who will win it? meanwhile in the united states, nikki haley pulls out of the race for the republican nomination which means it will be the contest two thirds of the country said they didn't want, biden versus trump. very good evening. four british chancellor jeremy hunt, this was the last budget before the election. didn't feel like a launchpad for an immediate campaign, the centerpiece of the budget, 2p

cut in national insurance rates similar with a cut introduced in january would save the average worker about 75 pounds a month. but is that the budget that conservative backbenchers were after? the answer plainly is no, but the truth is, there was not enough money to deliver the cuts in income taxes they demanded after the measures announced today, the budget of responsibility announces the chancellor has just eight point 9 billion pounds of head room left, down from the 13 billion he had in the autumn statement. that is the second smallest on record. yet, the chancellor gave a relatively optimistic view of the economy. after covid, war in europe, damage inputted on the economy, he said this is a budget for long-term growth. >> today's obr forecast also shows that we have made good progress on the prime minister's three economic priorities compared to when the three pledges were made, inflation is have, that is falling in line with fiscal rules, and growth is

1.5 percentage points higher than predicted. and as growth returns, they don't have a growth plan, so they may as well listen two hours -- to ours. as growth returns, our plan is for economic growth, not sustained through migration, but one that raises wages and living standards for families. not just higher gdp but higher gdp per head, and that means sticking with our plan for long-term budget for road, better public services, and lower taxes. christian: the chancellor is trying to follow his own fiscal rules which mean that debt as a percentage of national income coming down between the fourth and fifth year of his forecast. there are those who think you can run a hired debt to gdp. lots of countries do that, the united states is a good example. but jeremy hunt is fiscally

conservative, so there were no budgets or no formal plans, just a vague penciled figure which looks a bit austere, maybe even undeliverabl but the chancellor says that if we can find these greater efficiencies, we will not need higher taxes. >> we need a more productive state, not a bigger state. in the autumn 2022, i set day today spending to increase by 1% a year in real termsver the next parliament. some say that is not enough and we should raise spending by more. others say it is too much and we should cut it to improve efficiency. neither are right. it is not fair to ask taxpayers to pay for more when public service productivity has fallen. nor would it be wise to reduce that funding given the pressures public services face, so i'm keeping the planned growth in day-to-day spending at 1% in real terms but we are going to

spend it better. christian: he went on to announce money for new ai technology within the nhs and police which he said would give staff more time to focus on the re job. elsewhere there was a freeze on fuel and alcohol duty. tax hike on business flights changes to how holiday loadings are taxed. and as expected, he is abolishing non-dom status after four years, those living in the u.k. will pay the same tax as other u.k. residents. the chancellor said all in all it was a taxcutting budget which may raise some eyebrows. the overall tax burden is as high as it's been since 1948. the chancellor consists conservatives will always stick to their broader philosophy. >> we believe that in a free society the money you earn doesn't belong to the government, it belongs to you. and if you want to encourage artwork, -- hard work, we should

let people keep as much of their own money as possible. conservatives look around the world and economies in north america and asia and noticed countries with lower taxes generally have higher growth. economists argue about cause and correlation. but we know that lower text economies have more energy, more dynamism, and more innovation. and we know that is britain's future, too. christian: we will focus on keir starmer's response to that shortly but here to unpack the chancellor's statement is paul johnson. good to see you. right now, the economy is not growing, we are in recessi, incomes per head are falling, and people can feel it. does a two pence cut on the backs of a similar cut in january help people with the squeeze they are feeling? john: it is a pretty chunky tax cut with those together and if

you are above average earnings, 40,000 a year, that is worth more than a thousand pounds a year to you. that is a pretty chunky tax cut, but as you say, it comes off the back of other tax rises in a generally poor period for living standards. but those cuts by themselves, that is a big tax cut for some people. christian: we shouldn't ignore the threshold freezes ahead fixed for the next three years. is the chancellor taking with one hand while giving with the other? john: yes he is, absolutely. even with these national cuts, some are significantly worse off. lower earners earning under 25,000 or so will be worse off, and higher earners will be worse off. if we keep those threshold freezes for another few years,

then the number of losers increases. a one-off improvement through the national insurance cut, but some losses definitely from the threshold, allowance freezes. christian: jeremy hunt said today when it comes to public services, it is not about how much we are spending on those services, it's about efficiencies, what we get out of them. how true is that? john: partly true. clearly, you want your public services to be as efficient as possible, and the more efficient they are the better you should get out of public spending. but it is clear in some areas of public spending, there is simply enough money to clear the backlogs, asylum systems, prison systems, a limited amount more than you can do without additional resources and some of those areas. of course, the whole budget is constructed around the assumption that you can manage

cuts in some of those areas over the next five years, something, to put it mildly, will be extremely challenging, given how much they are struggling already. christian: a good point in the times today. both parties seem to be identifying very small pots of money. you could look at the non-dom issue in that light. cutting waste and public services is probably another. the truth is these amounts in the grand scheme of things are pretty tiny. the elephant in the room is the debt. neither side seems to be engaging with how we will tackle that. john: exactly right. there are some big numbers knocking around. this has been a very big tax-raising parliament. the changes we have seen today are small compared to the big increases we have seen over the last few years. debt interest spending is pretty much at record levels.

the national debt is at its highest level since the early 1960's. when you compare the money that you get from non-dom money, taxing private schools and so on with the scale of those issues, not to mention the issues of demographic change, aging population, spending on health and pensions and so on, they are small numbers. the reality is whoever is chancellor after the next election, they will have some very big decisions to make about whether they will really implement these spending cuts, or whether they will have to find substantial tax rises, or whether they think they can get away with more borrowing. big decisions will have to be made. i'm afraid a lot of them have been kicked down the road this time around, in particular, these numbers about public spending. we have learned nothing more about where the chancellor intends to make the cuts. christian: talking about that headroom i mentioned, just over 8 billion, which is pretty small

inreasury terms, we don't know when the election will be, but some were betting there would be another financial statement before they call the election. does this limit his options? john: he has had his options very limited today by the fiscal rules he is following. because of that very limited so-called headroom against his fiscal targets that they were not able to do more. the very auto way in which these targets are constructed -- odd way in which of these targets are construction means arithmetically if he does another one in autumn, everything gets pushed forward a year. that probably gives him more apparent sce, if he has another year of tight spending plans, more growth in the economy, it might give him a chance to have more tax cuts because his target is very oddly at the moment that the debt should be followed between march 28 and 29.

if that sounded weird and bizarre, it is because it is slightly mad, but that is the set of targets the chancellor is actually focusing on. because the target will change in the autumn, he may get more space against those very particular and odd targets. christian: he has put himself in this straitjacket, debt as a percentage of gdp. there are other countries who would say you need to spend to grow. the united states, although we talk about them as a low tax economy, look at the inflation reduction act, subsidies a go-go in that and they are spending money to grow. why are we not doing the same? john: we are not like the united states. the united states is a continental-sized economy, the world's reserve currency. we don't have the level of freedom they have. as i said, we already have debt

interest spending at pretty much record levels, certainly record levels in recent times. we are having to sell more government debt over the next few years by a factor of two or 2.5 compared to the last 25 years, so there are limits on what we can do in that context. christian: is that a hangover from the truss budget, the way the markets were spooked? is the government more careful as a result? john: i don't think anyone would be talking about doing anything quite as radical as liz truss and kwasi kwarteng were trying to do, giving us an indication of what limits were possible. i don't think if the chancellor said he wanted to borrow another 15 billion over the next few years, that would massively spooked the markets. in fact when he is doing is the reverse of what you are describing, putting in place some very serious investment spending cuts. he has been quite tight on

day-to-day spending, much tighter on investment spending, which he is looking to cut by tens of billions over the next few years. christian: really grateful for long day., i know you've had a appreciate you coming on the program. paul johnson there. on the other side of the break, will be joined by our political panel to discuss the economy. justin greaney, keir starmer's former policy director, and the u.k. economist at deutsche bank. we will be right back. for our u.k. viewers, let's look at some of the stories making news today. judges in england and wales have agreed a plan to end the worst delays on rate cases come to trial. 181 trials have been delayed more than two years will not have to go before a jury. the justice said the judge in charge of the plan said victims had been facing onyx with all

delays -- on acceptable delays. a major fire at southhampton's stadium has because their match to be called off. smoke could be seen for miles around. one person has been treated for the effects of breathing in smoke. junior doctors in nohern ireland are taking strike action overpay for the first time today. the british medical association says the deal put to them was the minimum junior doctors could have been offered. the department of health in northern ireland said the propals mounted -- amounted to an average pay increase of 9%. you are lie with bbc news. jeremy hunt did what all chancellors do, accentuating the positives. there was much talk about how the economy had turned the corner. he was keen to point out that taxes ve been cut by 900

pounds for the average worker since his autumn statement last year. but he forgot to mention the freeze on tax thresholds for the next three years will sap much of the spending power out of the economy. moody's today said the announcement of pre-election tax cuts well intending straight plans will perpetuate the u.k.'s fiscal challenges. the labor leader defined it in much stronger terms. >> over 14 years we have seen our fair share of dilution from the party opposite, a prime minister who think the cost-of-living crisis is starting to ease. an education secretary who thinks concrete crumbling on our children deserves her gratitude. a former prime minister who still believes crashing the pound was the right path for britain. and today, a new entry into this hall of infamy, the chancellor who bruises into this chamber in a recession, and tells the

working people of this country that everything isn track. crisis? what crisis? or as the captain of the titanic and the former prime minister may have said, iceberg, what iceberg? smiling as the shit goes down, the chuckle brothers have declined, dreaming of santa monica or a quiet life surrey, not having to cell phone his election. christian: keir starmer speaking in the house after the chancellor's speech. justine, it's a sensible budget according to some mps but not very political or a party that is 20 points behind in the polls. >> i think i would argue it is not political enough. as the clip showed, the government has lost the narrative on what is happening with our economy. the reason for that is because they have an election coming up, wants to say everything is getting better but that does not

everyone's experience with the cost-of-living, the state of our public services at the moment, and the fact that for many of them taxes are at significant higher levels than they experienced before. that is because of the impact of covid on our economy, cost-of-living challenge, taking action on energy bills, and i think what the government has failed to do is really explain the backdrop to the decisions it is taking in the budget today. as a result, as we heard, labor will fill in that space and set out why they see the decisions. they will point to liz truss' disastrous budget in october 2022. these are the challenges the government faces. it is not owning the narrative of the past. it is very hard to win an election looking ahead. the other piece of it that is missing or the conservatives in the government is what has happened to leveng up? the les rishi sunak has talked about this, the worse the

conservatives have done in polls. there is nothing in the budget today on skills, improving prospects. when sunak was asked about this, he pointed to pots of money given to councils. we were doing leveling up at the depament of education before any other department was talking about leveling up. it was about skills, potential, education. the big question for me if i'm a tory backbencher today, rishi sunak, does he even understand what leveling up means if he doesn't understand it, how can he deliver it? what does that mean for the conservatives? christian: that would be music to keir starmer's ears, but it has to be said, he has nicked one of your policy issues, non-dom issue, and he is closing down labor options, isn't he? claire i thought it was very

close: tactical to do that. it is a policy that conservatives effectively ridiculed when it was first released by labor to make sure that non-doms paid their way in the u.k.. now we see the conservative chancellor announcing it. i think it really shows it is the labour party who are coming forward with some of those new ideas. and i think justine is right. the big idea the conservatives had was leveling up. it was about investing in the economy. we just didn't see any of that today. we didn't see a plan for growth. i don't think it will be a game changer for voters but most importantly i don't think it will stimulate the economy in the way that we need it to an order to deliver those proceeds that would allow us to reinvest in public services and over the longerm the tax burden down. christian: some very restless backbench is already responding tonight. suella braverman has been out

saying it is not the budget she wanted. does it become a political problem for the prime minister tomorrow? >> i think the problem is too many backbenchers have been too restless for too long, demanding all kinds of things in the short-term just to get people to a difficult few weeks. a couple years ago, 37 billion pounds spent on subsidizing fuel bills. will anyone about at this election, saying i am voting conservative because they bailed me out at that point in time? no. the reality from this boat was minuscule. the bill from the pandemic was so indoor miss. the psalms they are arguing now, 8 billion versus 4 billion spent in a way in the u.k. is arguing against it. the government needs to explain that the reason we are here is not because they have been on a crazy spending spree,

conspicuous consumption, but paying the price of getting written through tough economic times. the direction of travel now and the philosophical approach for conservatives is now back on track and clear for all to see. it may not be convincing enough for the general election but that is the most possible way of going into an election when there are genuine differences. christian: the debate has been about whether there should be cutting taxes or a cut in public services -- i beg your pardon, more money into public services. people would want both in an ideal world, or money pumping into the nhs and education and paying less in tax. you only get to that if you have productivity, and that is something the british economy is not doing. did you see anything in the budget today that convinces you we are on a clearer path to growth? sanjay: it's a good question. there were some good things in this, let's not be so dismissive

about this. some supply-side policy measures that we were looking for. that will boost growth 20 to 30 basis points. is it a game changer for the economy? i'm not so convinced about this. as the other panelists have been saying, there is no clear-cut strategy for growth. all the policy measures, it is not quite clear how sustainable these tax cuts will be. as paul mentioned, a lot of these tax cuts are paid through my tax rises. with public finance under scrutiny, finances being vulnerable, we have seen the shocks over the last couple of years alone. i think there are bigger questions about how challenging the public finances will be once we get to a spending review, once we start to put actual numbers to departmental spending, spending. then we will start to see more of the reality of the current state of finance. at the moment, we have taken

root for some cheap tax cuts. it will boost real disposable income to some extent. will it be a changer for growth? the jury is out on that. christian: he was certainly aiming for a particular part of the electorate, the middle learners. the raising of the threshold for child benefits so that higher income families can benefit was a bit of a surprise. it is almost going after middle england, saying we are trying. would do more.head room, we >> i think he is trying to send the signal that this is still the conservative party, cutting taxes for a wide group of people. the national insurance reduction today will be benefited by millions of workers. the challenge for me is that what i would like to see is a much longer-term economic strategy to really get public finances back on track. the reality is it is live off

track, so part of this is how you do that reset to tilt our expenditure from funding failure to funding success. at some stage, we will have to see a clear strategy. christian: we will not know what labour will do because the manifesto is closely guarded for obvious reasons. you think they are trying to work out that sort of plan, industrial strategy to do that? claire: basically, labour's economic strategy is to have a plan for growth that would actually be a successor to leveling up, strategic plan for the country that meant that we were investing in some of the longer-term drivers of growth to improve our productivity. some of those policies justine was talking about in terms of education and skills, really

important that they are integral to our economic plan. that is where i think they will go. there will be discussion over the next few months, but that is not the big game in town. christian: panel staying with us. we will go to a short brea announcer: funding for presentation of this program is provided by... financial services firm, raymond james. bdo. accountants and advisors. cunard is a proud supporter of public television. announcer: funding was also provided by, the freeman foundation. and by judy and peter blum kovler foundation, pursuing solutions for america's neglected needs. ♪ ♪ ♪ ♪

♪ ♪ ♪ ♪ announcer: funding for presentation of this program is provided by...