Rishi Sunak risks Tory wrath by pouring cold water on tax cut hopes

Rishi Sunak risks Tory wrath as he pours cold water on hopes of tax cuts saying more borrowing to fund them would be a ‘really bad idea’

Rishi Sunak risked the wrath of Tories today as he poured cold water on hopes of tax cuts anytime soon.

At a town hall event in Kent, the PM warned it would be ‘hard’ to cut the huge burden because it would mean more borrowing.

He insisted the idea of cuts, like handing the public sector huge pay awarded, ‘sounded great’ but would quickly turn out to be a ‘really bad idea’.

The remarks came as the Bank of England sparked renewed fears of a recession by hiking interest rates from 4.5 per cent to 5 per cent.

The move leaves Brits facing more eye-watering increases in mortgage costs alongside the wider cost of living crisis. 

Ministers have been signalling that they want tax cuts this year, with the election looming in 2024. The burden is heading for a post-war high as the government tries to rebuild the public finances after Covid and the Ukraine war.

But figures yesterday showed borrowing surging and the £2.6trillion national debt pile worth more than total GDP for the first time since 1961. Interest payments are expected to cost £100billion this year.  

At a town hall event in Kent, the PM warned it would be ‘hard’ to cut the huge burden because it would mean more borrowing

The OBR confirmed earlier this year that the government’s policies will leave the tax burden at a post-war high

But Mr Sunak said: ‘Any time you hear from politicians or anyone else something that means the government will be borrowing more money, that should set off an alarm bell in your heads and say ‘hang on, inflation is really high, interest rates are already going up, is that going to make the situation better or worse?’

‘It might sound great – all those things I’ve talked about, let’s cut your taxes over here, let’s spend some more money over there, let’s do massive pay awards for everyone in the public sector because we really value the work they do.

‘If I did all those things, it might feel great for a day, for a week, for a month and pretty quickly it would turn out to have been a really bad idea.’

Pressed later on whether that meant tax cuts were off the agenda, he said: ‘I’m a politician, I’m a Conservative politician, who wouldn’t want to cut people’s taxes?

‘Do you think if I thought that was a good thing to do, I wouldn’t have done it? Of course I would.

‘But it goes back to what I was saying before. Borrowing lots of money to do things that sound great isn’t the responsible approach, it is not going to help anyone in the long run.

‘In the same way that I talk about public sector pay, tax cuts, spending, ultimately if the Government is having to borrow money to do all those things, it just puts fuel on the fire of inflation, makes it worse, makes it last longer, means interest rates go up even more and that is not going to do anyone any favours.’

Mr Sunak insisted his pledge to halve inflation would effectively prove to be a ‘massive tax cut’.

He added: ‘Inflation is the tax, so if we can halve inflation and get it down to 2% over time, that is the biggest tax cut we can deliver.’

On the challenges facing the country, Mr Sunak said: ‘We are on it and we are going to get through it.

‘Now that’s not easy, as I said, and anyone tells you that it’s easy or can happen overnight, they’re not being straight with you.

‘I want to be honest with you, these things are tough. They require difficult decisions, but that’s what you should get from your Government. That’s what you should get from your Prime Minister, and that’s what I’m going to do.’

Shock figures yesterday showing prices still not slowing down have made a bump to 5 per cent a real possibility

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