Rachel Reeves’ deputy Darren Jones has defended the Government’s new value for money tsar receiving £950-a-day.
Chancellor Rachel Reeves said former HS2 non-executive director David Goldstone would “help us realise the benefits from every pound of public spending”.
He will be in post for a year and is responsible for providing advice to the Chancellor and Chief Secretary to the Treasury to save money by reforming systems and improving policy outcomes.
But fury has erupted over Mr Goldstone’s pay, with the bureaucrat set to rake in £950-a-day and he will only work one day a week.
This would mean he would pocket the equivalent of £247,000 a year if he worked five days a week.
Asked about the pay of David Goldstone, who will head up the new Office for Value for Money (OVFM), the Chief Secretary to the Treasury, Darren Jones, told LBC: “The rate of return for the improvements that we will make from looking at these areas of spending will be far, far greater.
“It is right that we pay people for their time. We can’t expect people to work for free. That is an important way in which we do things in this country.
“Actually, the day rate for David is, on a benchmark basis, competitive.”
Mr Goldstone previously oversaw delivery of the London 2012 Olympics, where costs spiralled to £9.35billion.
That was almost four times the initial £2.45billion estimate.
He was also chief operating officer at the Ministry of Defence (MoD) between 2017 and 2020.
The Commons public accounts committee said the following year that the MoD had been guilty of ‘repeatedly wasting taxpayers’ money’.
Mr Jones was also asked if he believed the markets would take fright after Labour’s Budget, similar to what happened after Liz Truss’s mini-budget.
He replied: “No, I don’t, because we have got strong and robust fiscal rules in place.
“One of the reasons it is very different from the Liz Truss period is we have got the stability rule which means that day-to-day spending of public services will be paid for by tax receipts, not borrowing money each and every month as the last government did.”
The scale of extra borrowing in Rachel Reeves’ Budget – around £32 billion a year on average – saw yields on government bonds increase as the market responded to the Chancellor’s plans.
The value of the pound has also fallen against the dollar following Labour’s first Budget in more than 14 years.
The Treasury minister compared Ms Truss’s decision to sack the Treasury’s chief official and snub an analysis of her spending by fiscal watchdog the Office for Budget Responsibility (OBR), with Labour’s plans.
He added: “Completely different in contrast to now: We’ve got verified reports from the independent Office for Budget Responsibility that say we meet our fiscal rules earlier than had been planned originally, 2027-2028, that those tough fiscal rules means there is a fiscal consolidation and that strong approach to public spending.
“We’re in a very, very different world.”
The senior minister conceded that the headline Budget tax rise in national insurance contributions (NICs) for employers would impact “working people”, following a similar admission by Ms Reeves.
The £25.7 billion change to employers’ NICs is expected to raise around £16.1 billion by 2029/30 as firms curb wage rises, cut hours and reduce profits – while public sector employers get compensation in their budgets for the change.
Asked by Sky News if it would impact workers, Mr Jones said: “Yes, but the question in the manifesto, the promise in the manifesto, was not to increase the rate of tax that employees pay in their payslip.
“It says that we make a promise to working people, that’s people who go to work and get a payslip, that we will not increase income tax or national insurance.”
The Resolution Foundation economic think tank has branded the increase a “tax on working people”, and said it will show up in their payslips in slower growth.
The OBR forecasts that by 2026-27, some 76% of the total cost of the NICs increase is passed on through lower real wages – a combination of a squeeze on pay rises and increased prices.
The measure could also lead to the equivalent of around 50,000 average-hour jobs being lost, the watchdog said.
Mr Jones also admitted to broadcasters that GPs and care homes will have to pay the NICs increase.
But he told BBC Breakfast some GPs “may end up in a better position than they were in before” because of extra investment across the NHS.
Despite an endorsement from the International Monetary Fund (IMF), financial markets have not been reassured by the Budget.
The yield – or interest rate – on a 10-year gilt, an indicator for the cost of state borrowing, hit 4.568% on Thursday afternoon, the highest point since August 2023, while the pound also weakened against the dollar.
