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.”
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.
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.
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.”
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.”
CBI faces autumn deadline to refinance rescue funding
The CBI faces a deadline next September to refinance millions of pounds of funding put in place to avert its collapse during the autumn.
Sky News has learnt that a seven-figure facility put in place with banks will expire at the end of the third quarter next year.
While the size of the facility is unclear, sources have said it is likely to be several million pounds.
According to the business lobby group’s annual report and accounts, which was circulated to members late last week, it was able to survive the aftermath of a sexual misconduct scandal “through the backing of key members, the use of reserves, support from creditors and with bank financing”.
“The bank financing is due to terminate on 30 September 2024, after which it is the board’s current intention to look to renew the facility if required.
“The exceptional costs from the past year have now been paid and the organisation has been reshaped so that salary costs are appropriate given the expected level of income.”
On Friday, Sky News revealed that the CBI was urging members to swallow a further rise in fees even as it battles to regain its former standing among political and business leaders.
Members will be asked at its annual meeting this week to approve a 5% rise in their subscription costs.
Self-styled as “the voice of British business”, the CBI has been slowly rebuilding its reputation, staging a slimmed-down version of its annual conference last month which featured an address by Jeremy Hunt, the chancellor.
The group has been slashing costs by axeing a chunk of its workforce and closing most of its overseas offices following several rape allegations against former employees, which triggered an exodus of corporate members including Aviva and John Lewis Partnership.
Tony Danker, its director-general – who was accused of inappropriate behaviour but had nothing to do with the more serious allegations – stepped down in April weeks after being suspended.
The CBI briefly entertained autumn talks about a merger with Make UK, the manufacturers’ body, but these have now been curtailed.
Abu Dhabi state-backed fund moves to take control of Daily Telegraph
An Abu Dhabi state-backed vehicle has moved closer to taking full control of The Daily Telegraph just hours after the launch of a regulatory probe that prevents it from removing key journalists from their posts.
Sky News has learnt that RedBird IMI has given the newspaper’s board and the government notice of its intention to activate a call option that will convert loans secured against the Telegraph titles and Spectator magazine into shares.
The move was communicated to key stakeholders late on Friday, and came as nearly £1.2bn was being transferred to an escrow account prior to its release to Lloyds Banking Group early next week.
A Whitehall source confirmed this weekend that the government had been notified about RedBird IMI’s move to exercise its option to take control of the shares.
A person close to the Abu Dhabi-based investor, which declined to comment formally, said it had already made it clear that it would seek to convert the loans “at an early opportunity”.
The activation of the call option does not mean the broadsheets fall under the immediate control of RedBird IMI, insiders pointed out on Saturday.
Lucy Frazer, the culture secretary, issued a Public Interest Intervention Notice (PIIN) on Thursday which has triggered an inquiry by Ofcom and the Competition and Markets Authority.
Pressure has been mounting in recent weeks from Conservative politicians for the takeover of the traditionally Tory-supporting Telegraph newspapers by a foreign state-backed entity to be probed under public interest and national security laws.
Sir Iain Duncan Smith and Lord Hague of Richmond, two former leaders of the party, have been among those who have called for scrutiny of the deal.
RedBird IMI has insisted that it would preserve the newspapers’ editorial independence and offered to give the government a legally binding assurance of this intention.
RedBird IMI has also pledged not to complete the acquisition of the media assets until it has received government approval.
On Friday, Ms Frazer confirmed a Sky News report that she would preserve the independence of the Telegraph during the investigations by making an Interim Enforcement Order preventing the Barclay family or RedBird IMI from interfering in their operation.
The IEO prohibits the removal or transfer of key Daily Telegraph journalists or any further change of ownership.
Both the family and RedBird IMI have agreed to the restrictions.
The notice of the intention to exercise the call option takes two of Britain’s most influential newspapers a stage closer to a change of ownership for the first time in nearly 20 years.
The Barclay family, which has owned the Telegraph since 2004, has been in dispute with Lloyds for years about the repayment of a £700m loan and hundreds of millions of pounds in interest.
Sky News revealed on Friday that Lloyds is preparing to distribute a £500m-plus windfall to its shareholders next year as a result of its ability to recover a loan in full that it had long since regarded as impaired.
Ms Frazer is seeking regulators’ responses before the end of January, after which the takeover of the broadsheet newspapers could be approved or blocked.
RedBird IMI is funded in large part by Sheikh Mansour bin Zayed Al Nahyan, the owner of Manchester City, has agreed that a trio of independent directors, led by the Openreach chairman Mike McTighe, will remain in place while the inquiries is carried out.
RedBird IMI’s move to fund the loan redemption has circumvented an auction of the Telegraph titles which has drawn interest from a range of bidders.
The hedge fund billionaire and GB News shareholder Sir Paul Marshall had been agitating for the launch of a PIIN.
The Telegraph auction, which has also drawn interest from the Daily Mail proprietor Lord Rothermere and National World, a London-listed local newspaper publisher, is now effectively over.
Until June, the newspapers were chaired by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who along with his late twin Sir David engineered the takeover of the Telegraph in 2004.
Lloyds had been locked in talks with the Barclays for years about refinancing loans made to them by HBOS prior to that bank’s rescue during the 2008 banking crisis.
Struggling CBI to impose 5% fee increase on members
The CBI is urging members to swallow a further rise in fees even as the lobby group battles to regain its former standing among political and business leaders.
Sky News understands that CBI members will be asked at its annual meeting next week to approve a 5% rise in their subscription costs.
It comes less than three months after the organisation – which styles itself as ‘the voice of British business’ – won a lifeline from banks which agreed to provide sufficient funding to avert collapse in the aftermath of a sexual misconduct scandal.
The CBI has been slowly rebuilding its reputation, staging a slimmed-down version of its annual conference last month which featured an address by Jeremy Hunt, the chancellor.
In a circular to members, it said the fee hike was in line with previous years.
However, the group has been slashing costs by axeing a chunk of its workforce and closing most of its overseas offices in an attempt to restore its finances to a more stable footing.
The crisis which erupted earlier this year, which followed several rape allegations against former employees, triggered an exodus of corporate members including Aviva and John Lewis Partnership.
The CBI briefly entertained talks about a merger with Make UK, the manufacturers’ body, but these have now been curtailed.
The business group declined to comment on Friday, although an insider said it was “standard operating practice…to adjust prices for inflation”.
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