Rishi Sunak promises to cut taxes as autumn statement looms
Rishi Sunak has promised he will cut taxes now the government has achieved its pledge to halve inflation by the end of the year.
The prime minister has been under pressure from many in his party to reduce the tax burden – which currently sits at a 70-year high – ahead of the next election, and rumours have been swirling that such policies could be announced in the autumn statement on Wednesday.
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Making a speech in north London on his economic plans, Mr Sunak said his “argument has never been that we shouldn’t cut taxes – it’s been that we can only cut taxes once we have controlled inflation and debt”.
And with the change in inflation – confirmed last week by the Office for National Statistics (ONS) to have dropped to 4.6% – it was time for the government to “begin the next phase” of its plan and “turn our attention to cutting tax”.
The prime minister did not reveal what taxes would be for the chop, but they are expected to be confirmed on Wednesday when Chancellor Jeremy Hunt delivers his statement in the Commons.
Can the chancellor lift the gloom? Watch live coverage on Sky News of the autumn statement from 11am on Wednesday.
During his speech, Mr Sunak celebrated the fall in inflation – though it still remains more than double the Bank of England target of 2% – saying it showed “when we make a major economic commitment, we will deliver it”.
Then moving on to the big question ahead of the autumn statement, he said: “I want to cut taxes, I believe in cutting taxes, what clearer expression could there be of my governing philosophy than the belief that people, not government, make the best decisions about their money.
“But doing that responsibly is hard. We must avoid doing anything that puts at risk our progress of controlling inflation, and no matter how much we might want them to, history shows that tax cuts don’t automatically pay for themselves.
“And I can’t click my fingers and suddenly wish away all the reasons that taxes had to increase in the first place – partly because of COVID and Putin’s war in Ukraine, and partly because we want to support people to live in dignity in retirement with a decent pension and good health care which will cost more as the population ages.”
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But the prime minister added: “Now that inflation has halved and our growth is stronger, meaning revenues are higher, we can begin the next phase and turn our attention to cutting tax.”
The prime minister said the government “can’t do everything at once”, and it would take “discipline” to “prioritise” what should be reduced.
However, he promised to make the reductions “in a serious, responsible way, based on fiscal rules”, adding: “Over time we can and we will cut taxes.”
Sunak’s argument has flaws – he’ll have to work hard to win it
Well, that was wild. Today, Rishi Sunak appeared to have perfected the art of the low-key big speech.
The prime minister announced tax cuts are coming right now, set out the five long-term priorities he’ll fight the election on and made his most aggressive attack on the Tory right’s belief in self-funding tax cuts.
All done on a hugely busy political day, competing with the COVID inquiry, CBI annual conference featuring the chancellor, an AI event with the deputy prime minister on the day a refreshed plan for foreign aid spending was being released and Lord Cameron’s formal arrival in the Lords.
At the heart of Sunak’s speech was an argument that having reduced inflation and debt, now everyone can share in the rewards. A prime minister – justifiably – wanting to share some of the credit for Wednesday’s tax cut announcement in the autumn statement.
This is his argument: “We could only cut taxes once we’ve controlled inflation and debt… and the official statistics show that promise has now been met.”
There are there problems with this statement from the prime minister. The first is that he has met only one, not both of his inflation targets – his government’s other is to get it back down to 2%, and at 4.6% it’s still very high by the standards of the last 20 years.
Secondly, debt is not going down – in absolute terms it is rising. Sunak means, but does not say, that debt is falling as a proportion of GDP, a slight of hand that matters.
Thirdly, he is boasting about growth, saying: “Our growth is stronger.” Yes, stronger than the March budget, but the last quarterly GDP figures came in at 0.0%, nil growth, and the latest indications from business point to all but no growth and maybe even recession in the coming months.
Instead what has changed is circumstance – the election, even at its furthest away point, is getting closer, while his colleagues are circling on a range of topics and he feels more unstable than at any point since the start of the year after the Rwanda court defeat.
This is an argument he is going to have to work very hard if he wants to win.
Read more:
What chancellor could announce in autumn statement
Over the weekend, Mr Hunt insisted the focus of the upcoming budget would be on growth for business, telling Sky News he wanted to help create a “productive, dynamic, fizzing economy”.
But the chancellor also said “everything is on the table” when asked about swirling rumours over possible tax cuts.
Sky’s deputy political editor Sam Coates understands taxes on personal incomes will fall in Wednesday’s statement, as the government also seeks to help households with the cost of living crisis.
In the latest edition of the Politics at Jack and Sam’s podcast, by Sky News and Politico, he said the cut was unlikely to be on the basic rate of income tax though.
Click to subscribe to Politics at Jack and Sam’s wherever you get your podcasts
However, the head of the Institute for Fiscal Studies, Paul Johnson, warned there was “no headroom there at all” for major tax cuts.
The economist said chancellors could “always find a few billion in a budget or an autumn statement if they want to”, but the public finances were “in such a mess” due to the amount being spent on debt interest, that there wasn’t a lot of wriggle room for Mr Hunt.
During his speech, Mr Sunak also promised to “clamp down” on welfare fraudsters, calling it a “national scandal” and “an enormous waste of human potential” that around two million people of working age were not in employment.
The government is said to be considering a big squeeze on benefits in order to find savings, effectively cutting working age welfare payments for millions of people.
The prime minister said: “We believe in the inherent dignity of a good job, and we believe that work, not welfare is the best route out of poverty.
“So we must do more to support those who can work to do so, and we will clamp down on welfare fraudsters because the system must be fair for taxpayers who fund it.”
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Chancellor: ‘Tax burden is too high’
Mr Sunak also used his speech to launch an attack on Labour for having “no experience” in business, and accused Sir Keir Starmer and the shadow chancellor Rachel Reeves of offering “fairy tale” answers to the questions of how to grow the economy.
But Labour’s national campaign coordinator, Pat McFadden, said: “The Tories have failed to deliver on so many pledges from the past. Why should people believe they will deliver on pledges for the future?
“It sums up this Conservative Party to claim things will be better tomorrow when they can’t even fix the problems of today.”
UK
Trump campaign co-manager calls Lord Peter Mandelson an ‘absolute moron’ as peer is confirmed as Starmer’s new US ambassador
The co-manager for Donald Trump’s presidential election campaign has called Lord Mandelson an “absolute moron” – as the peer was officially announced as the next UK ambassador to the US.
The Labour grandee, who served in Sir Tony Blair and Gordon Brown’s cabinets, will become the UK’s top diplomat in Washington as president-elect Donald Trump returns to the White House in January.
In a post on X, Chris LaCivita linked to an article in The Daily Telegraph which reported on Lord Mandelson describing Mr Trump as “a danger to the world”.
The peer also described Mr Trump as “little short of a white nationalist and racist” during an interview with an Italian journalist in 2019, according to the newspaper.
In the post on X, Mr LaCivita said: “This UK govt is special replace a professional universally respected Ambo with an absolute moron – he should stay home! SAD!”
He added: “Mandelson described Trump as a danger to the world and ‘little short of a white nationalist’.”
It comes as Sir Keir Starmer confirmed the appointment of Lord Mandelson to the post.
The 71-year-old said: “We face challenges in Britain but also big opportunities and it will be a privilege to work with the government to land those opportunities, both for our economy and our nation’s security, and to advance our historic alliance with the United States.”
The prime minister said: “The United States is one of our most important allies and as we move into a new chapter in our friendship, Peter will bring unrivalled experience to the role and take our partnership from strength to strength.”
Analysis:
Lord Mandelson’s trade background key to pivotal role
Return of ‘Prince of Darkness’ will leave Labour lefties furious
Chris LaCivita, co-manager of Donald Trump’s election campaign. Pic: Reuters
Sir Keir also thanked outgoing US ambassador Dame Karen Pierce, who will leave the post at the beginning of next year.
“I would also like to thank Dame Karen Pierce for her invaluable service for the last four years, and in particular the wisdom and steadfast support she has given me personally since July,” he said.
“She made history as the first woman to serve as UK ambassador to the US and she has been an outstanding representative of our country abroad. I wish her all the very best in future.”
Lord Mandelson was one of the key architects of New Labour and helped the party return to power in the 1990s.
He served as Sir Tony’s trade secretary and Northern Ireland secretary before standing down as an MP in 2004 to become a European Commissioner.
After Mr Brown awarded him a peerage in 2008 Lord Mandelson returned to government as business secretary.
The Met Office is urging people to prepare for “disruptive weather” this weekend as Christmas holidays begin.
Yellow warnings for wind have been issued and parts of the UK could be hit by gusts of up to 85mph.
An area of low pressure will cross the far north of the UK on Saturday bringing rain and strong winds across large parts of the country, the Met Office said.
The first wind warning covers Scotland, much of Northern Ireland, north Wales and north-west England between 7am and midnight on Saturday.
A second is in place between midnight and 9pm on Sunday, covering Northern Ireland, Scotland, Wales and all of western England.
Met Office yellow warnings for wind on Saturday…
…and for Sunday
“Dangerous coastal conditions” are expected, the Met Office warned, with large waves an additional hazard.
Road, rail, air and ferry services in Scotland are all likely to be affected by the weather conditions, Transport Scotland said.
Get the five-day forecast where you are
Rebekah Hicks, Met Office deputy chief meteorologist, said: “This period of disruptive weather coincides with a busy period on UK roads as the festive getaway starts for many.
“The area of low pressure will bring rain and strong winds on Saturday, with a chance of significant disruption especially to transport networks across the north, including the potential for ferry cancellations.
“The strongest winds are expected across northern Scotland on Saturday afternoon and evening, with the potential for gusts of 80 to 85mph in coastal districts.
“The strong winds will be more widespread on Sunday with gusts of 50 to 60mph across much of northern, central and western UK, locally higher for coasts and across high ground.”
It comes as drivers have been warned of a “pre-Christmas panic” on the roads and record levels of traffic.
Motorists have been urged not to travel on major routes for six hours on both Friday and Saturday to avoid the worst of the Christmas holiday traffic.
The RAC and transport analytics company Inrix said roads are likely to be busiest between 1pm and 7pm on those days.
Hotspots where queues are expected include the M3 between its junction with the M25 and the south coast, the M25 anticlockwise between its junctions with the M1 and the M23, and the M53 from Chester to Liverpool.
Will it be a white Christmas?
The wintry weather conditions are expected to turn more settled from the start of next week.
Winds will ease, but there will be further rain or drizzle moving east across the UK on Monday night, the Met Office said.
Christmas Eve will be a mild, blustery day with further rain or drizzle at times in the west and the best chance of sunny spells in the east.
It will be mostly cloudy and dry on Christmas Day, although strong winds and spells of rain are likely in the far north.
Temperatures are expected to be widely very mild, with the chance of settling snow looking slim.
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