Rishi Sunak has been urged to put the climate emergency at the heart of his Budget and end suspicions he is resisting the switch to net zero, with the Cop26 summit just days away.
The chancellor will unveil measures to raise wages, rescue the NHS, boost skills and improve transport links in a three-year spending settlement setting the battleground for the next general election.
He is also expected to continue the decade-long freeze on fuel duty – after prices at the pumps leapt to a record 143p a litre – despite criticism that the move clashes with climate policy.
With the post-Covid economy bouncing back faster than expected, the backdrop is rosier than his last Budget, six months ago, when the UK had yet to emerge from lockdown.
But none of a blizzard of measures already announced – to the fury of the Commons speaker – have targeted the transition to a green economy, to meet the commitment of net zero emissions by 2050.
Mr Sunak has been criticised for resisting finding the billions needed for that switch, after a strategy to replace CO2-pumping gas boilers in people’s homes fell flat.
The Green Alliance group said an extra £21bn of government investment is needed each year through to 2024 to “get on track to net zero” and stimulate private sector finance.
And Rachel Reeves, Labour’s shadow chancellor, urged the chancellor to match the party’s plans to spend £28bn a year on creating the jobs “of the future”.
At Labour’s conference, she promised “gigafactories to build batteries for electric vehicles, a thriving hydrogen industry, offshore wind with turbines made in Britain, planting trees and building flood defences”.
Mr Reeves told The Independent: “I believe the only responsible chancellor is a green chancellor.
“Value for money means knowing when and where not to spend. But it also means knowing when and where to invest – to prevent far greater costs further down the line. There is no better example of this than in the case of climate breakdown.”
Among the expected spending announcements are:
* An increase in the minimum wage from £8.91 to £9.50 an hour – worth an extra £1,000 a year for a full-time worker, the Treasury says.
* An end to the public sector pay freeze – although the cash will have to come from departmental budgets and any increases may not match inflation, a minister admitted.
* An extra £5.9bn for the NHS, as it struggles with a record patient backlog – on top of the earlier £12bn a year for health and social care to be funded from a national insurance hike.
* An extra £1.5bn from train and tram upgrades in major cities – although the brakes have been slammed on hopes for a new fast route across the Pennines.
Crucially – although day-to-day spending is rising at more than 3 per cent a year – the NHS is swallowing up more than 40 per cent of it, leaving little for other lower-priority departments.
The Institute for Fiscal Studies has warned that local government, further education, prisons and the courts are again in the firing line for further cuts of around £2bn next year.
It is also feared that education will be a Budget loser, with Mr Sunak expected to throw out the department’s request for £7bn for post-Covid catch-up.
Mr Sunak is expected to slash billions more from overseas aid – on top of the existing £4bn-a-year reduction – despite warnings that the move risks failure at the crucial Cop 26 summit.
Several “accounting tricks”, including foreign currency handouts to developing countries from the International Monetary Fund and the cost of Covid vaccine donations are expected to be used.
Another shadow over the chancellor is a likely cost-of-living crisis in the months to come, with energy bills set to rise sharply when the price cap is raised again next Spring.
Inflation is at 3.2 per cent and is likely to continue to rise for the rest of the year – wiping out government boasts about pay rises, hailed as a benefit of Brexit.
In a tweet, the chancellor said: “Tomorrow’s Budget and spending review will deliver a stronger economy for the British people.”
