Rishi Sunak has told the Conservative party conference he would only consider cutting taxes once the public finances are on a “sustainable footing” following the Covid crisis.
The Chancellor, who has faced criticism from both Tory allies and political opponents over the scale of the tax burden, said it would be “immoral” to borrow more.
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At a glance: 5 key points
- Mr Sunak refused to rule out further tax hikes, saying “we need to fix our public finances” but he acknowledged that rises are “unpopular, some will even say un-Conservative”.
- He said Brexit – “despite the challenges” – meant that in the long term the UK would have “agility, flexibility and freedom” and help create “a renewed culture of enterprise”.
- Mr Sunak added that “tackling the cost of living isn’t just a political soundbite, it’s one of the central missions of this Conservative Government”. Rising energy bills, an imminent cut to Universal Credit and next year’s national insurance increase will add to pressure on household finances.
- He also confirmed more than £500 million in fresh funding to help people back into work as he seeks to stem the continuing turbulence of the coronavirus pandemic.
- The Chancellor announced new measures to help ensure the UK remains “a global leader” in artificial intelligence (AI), claiming it could be worth around £200 billion a year to the economy if it matched the transformational impact of the steam engine, computers or the internet.
What’s been said
On the eve of his conference speech, Mr Sunak was warned by Commons Leader Jacob Rees-Mogg – a darling of the Tory right – that taxation has hit “the limit”.
But Mr Sunak has refused to rule out further hikes and, addressing a packed conference hall in Manchester with Boris Johnson in the audience, defended his approach.
“Our recovery comes with a cost,” he said.
“Our national debt is almost 100% of GDP (gross domestic product – a measure of the size of the economy).
“So we need to fix our public finances.”
Mr Sunak acknowledged that tax rises are “unpopular, some will even say un-Conservative”.
But he added: “I’ll tell you what is un-Conservative: unfunded pledges, reckless borrowing and soaring debt.”
The Chancellor continued: “Yes, I want tax cuts. But in order to do that our public finances must be put back on a sustainable footing.”
Ahead of his speech, he faced questions about whether he would have to add to the historically high tax burden beyond April’s planned 1.25 percentage point increase in national insurance.
The Chancellor was asked repeatedly about whether he would approve further tax increases, including a hike to council tax to help fund social care after a warning from local authorities.
Mr Sunak told Sky News he would not “pre-empt” the local government finance settlement later in the year and added to LBC he “never can comment about future tax policy”.
Asked about a possible increase to income tax before the next election, he told BBC Breakfast: “Recently we did make a significant announcement on tax and it was a difficult decision to make, especially for a Conservative Chancellor and a Conservative Prime Minister.
“But we took that decision because we wanted to make sure the NHS got the significant funds it requires to help recover strongly from coronavirus.”
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