Liz Truss and Kwasi Kwarteng are being warned not to stretch their plans for medium-term growth beyond the traditional definition of three to five years amid concerns in Whitehall that the fiscal plan may take the best part of a decade to deliver.
Downing Street insiders are privately admitting that the target of 2.5% will not be reached by the general election and could take more than the usual time period that was expected when they announced a medium-term plan.
They argue that voters will be able to see “spades in the ground” by the time of the election in 2024, and a pathway to higher growth in the years ahead.
But since the mini-budget, a Treasury source said there had been much debate about how long the timescale for “medium-term” growth should be, and whether it could even stretch to the end of the next parliament – potentially seven years away – which many would consider to be too long for the definition of medium term.
Kwarteng, the chancellor, announced his target of 2.5% growth at the mini-budget but refused to put a timescale on it. He confirmed the ambition in his party conference speech on Monday.
Some Conservatives have also issued warnings about the timescale for the growth plan. Mel Stride, the Conservative chair of the Treasury committee, said: “To take an absurd example, if you had a target that was many, many years in the future, then it becomes meaningless.
“So it’s got to be near term enough to be a proper, rigorous constraint on the government. And I think that will be where part of the debate will lie. It’s not going to be three years down the line now, because I think that bird has flown. Is it five and is that acceptable?”
The government has repeatedly refused to publish interim forecasts from the Office for Budget Responsibility (OBR) with its projections for growth, based on the state of the public finances before the mini-budget. The OBR has said more draft forecasts taking the mini-budget into account will be ready by Friday.
However, Kwarteng on Tuesday stuck by his commitment to a further medium-term fiscal plan on 23 November and OBR forecasts to accompany them at the same time.
The Liberal Democrats are planning a humble address next week in parliament in an attempt to force the publication of this week’s new OBR forecasts.
The party’s motion will call for “the economic and fiscal forecasts produced by the Office for Budget Responsibility, not later than 11am Wednesday, 12 October 2022”.
