United Kingdom

Boris Johnson could loosen spending rules to allow new Chancellor Rishi Sunak to splurge billions

The new Chancellor is ready to turn on the spending taps, Downing Street indicated yesterday.

Attending his first Cabinet meeting in the role, Rishi Sunak repeated the Treasury’s demand that departments must cut 5 per cent from their budgets so more cash can be spent on schools and hospitals.

The Government appears to be keeping open the possibility of relaxing tough fiscal rules laid down by Mr Sunak’s predecessor, Sajid Javid, which limit the amount Ministers can spend.

Rishi Sunak, pictured, attended his first Cabinet meeting on Thursday following the shock resignation of his former boss Sajid Javid 

It is not yet known wehter Mr Sunak, pictured with Chief Secretary to the Treasury, Stephen Barclay, will deliver his first budget as planned on March 11

Mr Javid, pictured, handed back the keys to Number 11 after he was ordered to sack his entire team of advisers

The new look cabinet sat for the first time on Thursday following the brutal reshuffle 

The Prime Minister’s official spokesman would only say that the Government will continue to have ‘a clear fiscal framework’, rather than pledging to stick to the present one.

It will add to speculation that the rules could change to enable Boris Johnson to spend billions more on infrastructure.

The pound jumped on Thursday as investors bet that the promotion of Mr Sunak to Chancellor would herald the beginning of increased spending.

There was also continuing confusion yesterday over whether the Budget will go ahead as scheduled on March 11.

Number 10 would only say that ‘extensive preparations’ have already been carried out and they would continue ‘at pace’.

Yesterday’s Cabinet meeting rubber-stamped Mr Johnson’s new points-based immigration scheme designed to reduce the number of low-skilled migrants entering Britain from the start of next year.

Ministers vowed it would lead to a reduction in the total number of migrants – but were unable to say in what year net migration would actually start to fall.

Yesterday Mr Javid wished Boris Johnson a ‘Happy Valentine’s Day’ as he left his home a day after his dramatic resignation as Chancellor when he was told he had to sack all his advisers.

Friends said that he intends to remain in Parliament rather than leaving to take up a lucrative private sector role.

Opening yesterday’s Cabinet meeting, Mr Johnson congratulated those present on ‘achieving or retaining’ their jobs after a wide-ranging shake-up which saw a host of senior figures sacked.

‘We have to repay the trust of people who voted for us in huge numbers in December and who look forward to us delivering,’ the premier said.

Boris Johnson's new-look cabinet 

1. Amanda Milling - Tory Chairman and Minister without Portfolio 2. Simon Hart - Secretary of State for Wales 3. Gavin Williamson - Education Secretary 4. Liz Truss - International Trade Secretary, Women and Equalities Minister 5. Matt Hancock - Health Secretary 6. Mark Sedwill - Cabinet Secretary 7. Boris Johnson - Prime Minister 8. Rishi Sunak - Chancellor 9. Therese Coffey - Work and Pensions Secretary 10. Robert Jenrick - Housing, Communities and Local Government Secretary 11. Grant Shapps - Transport Secretary 12. Alister Jack - Scottish Secretary 13. Oliver Dowden - Culture Secretary 14. Stephen Barclay - Chief Secretary to the Treasury 15. Mark Spencer - Chief Whip 16. Suella Braverman - Attorney General 17. Jacob Rees-Mogg - Leader of the Commons 18. Anne-Marie Trevelyan - International Development Secretary 19. Baroness Evans - Leader of Lords 20. Alok Sharma - Business Secretary 21. Michael Gove - Chancellor of the Duchy of Lancaster 22. Dominic Raab - Foreign Secretary 23. Priti Patel - Home Secretary 24. Ben Wallace - Defence Secretary 25. Robert Buckland - Justice Secretary 26. George Eustice - Environment Secretary 27. Brandon Lewis - Northern Ireland Secretary

The PM also engaged in a call-and-response session with his new team, asking them: ‘How many hospitals are we going to build?’ before they replied in unison: ‘Forty.’ Mr Johnson also asked the Cabinet how many more police officers would be recruited, to which they replied ‘20,000’. Turning to economic matters, Mr Sunak reminded all Ministers that their departments must find 5 per cent savings so that money can be ‘re-prioritised on other priorities’.

But, despite this, there were indications that ministers are considering watering down Mr Javid’s fiscal rules, which say that public sector net investment should not average more than 3 per cent of GDP, and that debt interest should not exceed 6 per cent of revenue.

Asked whether these rules – which were contained in the Conservative manifesto – would continue, the PM’s spokesman said: ‘We will continue to have a clear fiscal framework, and that gets confirmed at Budget. The Chancellor is busy getting down to work and that will continue over the weekend as the preparations for the Budget continue.’

Downing Street said Ministers agreed the implementation of a points-based immigration system from January 1, 2021.

‘The system will be simpler and fairer and will not discriminate between countries and would return democratic control of immigration to the British people,’ Mr Johnson’s spokesman said.

‘The PM stressed that we must demonstrate that the UK is open and welcoming to talent from across the world but the new system would end reliance on importing cheap, low-skilled labour – bringing down immigration numbers overall.’

Mr Javid resigned as Chancellor on Thursday after refusing to bend to Mr Johnson’s demand that he get rid of his advisers.

The PM wants to set up a joint ‘economic unit’ comprising of special advisors to both Number 10 and Number 11.

It is understood that the new unit is to be headed by Liam Booth-Smith, one of Mr Johnson’s special advisers.