by Mikey Smith
The Chancellor didn’t appear to have full grasp of the figures when he went on the radio to have a pop at Labour’s manifesto
Mr Hammond claims there’s a £58 billion hole in Labour’s funding – but didn’t appear to know the true cost of HS2 – the major rail project linking London with Leeds, Birmingham and the East Midlands.
Asked for the cost of the major project by the BBC’s John Humphrys, Hammond said: “About £32 billion.”
Humphrys said: “£32 billion? Not £52 billion?”
A flustered Hammond replied: “Er it’s…over…I mean…there’s a huge amount of contingency built in to the budgeting for these projects.”
“And they’re usually met, these contingencies, aren’t they?” Humphrys shot back.
“These things almost always cost more than we expect.”
Humphrys pointed out Hammond’s claim that Jeremy Corbyn ’s manifesto ‘doesn’t add up’ relied on combining current spending and capital spending.
- Current spending is the day-to-day expenses of the country, which need to be covered by taxation or other ongoing income.
- Capital spending is one off costs, like buildings and the initial costs of nationalisation. Because they don’t have ongoing costs, they don’t increase the deficit, but they do increase the overall national debt.
Humphrys noted that even Hammond doesn’t combine the two figures when making his financial statements.
But Hammond said even the one off costs have to be paid for “either through taxation, or through borrowing.”
Labour have accepted they will borrow to pay for investment in infrastructure.
Humphrys asked: “Are you honestly telling me that you are not going to borrow anything to spend on capital or infrastructure projects over the next five years?”
Hammond admitted: “Of course we’re going to borrow, but we’ve set out our fiscal rules in the Autumn Statement, you’ll have to wait and see in the manifesto what we say about fiscal rules going forward.”
The Chancellor insisted the cost of HS2 was to be spread over 15 years, but offered no explanation for how that was different to Labour’s capital spending plans, repeating: “Labour’s plans do not add up.”