Budget 2021: There has been a shift in Tory philosophy - minister

There has been a "philosophical shift" in Conservatism after a Budget in which taxes and spending will rise to levels not seen in 40 years, the Chief Secretary to the Treasury has said.

Simon Clarke said he made "no apologies" for spending more on public services.

Chancellor Rishi Sunak has said that the prime minister is committed to tax cuts in the coming years.

His Budget included a real-terms rise for every government department.

Mr Sunak told MPs he did not like tax rises, but said it was a result of the "unprecedented crisis" of the pandemic.

Labour has accused the chancellor of running a "con game", adding that voters were tired of "jam tomorrow" promises.

Speaking to BBC Newsnight, Mr Clarke said that the state had a role to play in some of the government's policy priorities.

He said: "The chancellor was very open about the fact that this is something of a philosophical shift.

"What we want to see is to get the economy turbocharged, unlock productivity, and to deliver growth more evenly across UK. That does require some upfront spending."

He said the government was not "shying away" from public spending but that it would cut taxes "where there is a chance".

In his third Budget since becoming chancellor, Mr Sunak committed to spending increases of £150bn over three years.

This included nearly £2bn to help schools in England catch up following coronavirus, £6bn to tackle NHS backlogs and £7bn for transport projects.

The influential Institute for Fiscal Studies think tank said the spending plans were "more similar" to those of the Labour governments in the 2000s than George Osborne's - a former Conservative chancellor.

Newsnight's politics correspondent Nick Watt says some Conservative MPs are concerned about an increase in spending and the size of the government and that the chancellor has sought to reassure them.

Addressing the House of Commons, Mr Sunak acknowledged he was uncomfortable with how large the state had grown during the pandemic.

"Taxes are rising to their highest level as a percentage of GDP since the 1950s - I don't like it, but I cannot apologise for it - it's the result of the unprecedented crisis.

"But now, we have a choice," he said, adding "do we want to live in a country where the response to every question is: "what is the government going to do about it?"

"Or do we choose to recognise that government has limits, that government should have limits."

He later insisted to ITV's Robert Peston that this was not "empty rhetoric", adding that both he and the prime minister wanted to deliver lower taxes by the end of the Parliament.

He also told a meeting of backbench Conservative MPs on Wednesday night that "in the future every marginal pound should be put into lowering taxes".

Labour's shadow chancellor Rachel Reeves told ITV that it was important to raise money "but not in the way the government is doing it".

She said the government was introducing big taxes but said "those taxes are not falling on the banks - bankers got a tax cut" in reference to a 5% cut in the surcharge levied on banks' profits.

She added that Labour would raise taxes on "online giants who aren't paying their fair share".

Mr Sunak also used his Budget to repeat pre-announced measures, including an end to the public sector pay freeze and an increase to the National Living Wage from £8.91 per hour to £9.50.

According to Office for Budget Responsibility figures, household disposable income is set to rise by 0.8% per year.

Economic growth is forecast to rise to 6.3% next year - higher than previously predicted - but it will then slow to 1.3% by 2023.

New Budget measures included:

And the chancellor scrapped next year's planned increase in business rates in England and promised more frequent revaluations, and tax breaks for firms that make improvements to their properties, from 2023.

The government has faced strong criticism over its decision to reduce the universal credit benefit by £20-a-week.

Mr Sunak did not offer to maintain the £20 uplift - introduced during the pandemic - but instead announced that the "taper" would be cut so that instead of losing 63p of benefit for every £1 earned above the work allowance, the amount will be reduced to 55p.

Ms Reeves said that would not make up for the wider cuts to universal credit which affected five million families.