The gossip in Westminster is that Rishi Sunak intended to give today’s speech about his plans for the next year last week – but then the Supreme Court’s decision on his Rwanda plan blew that out of the water.
Still, for Conservatives desperate for positive news to shift the party’s poll rating, today’s remarks were worth the wait from a Prime Minister who had to do something to restore confidence in his premiership.
Perhaps to distract attention from the fact that he is not going to hit most of the five targets he set out for 2023, Sunak set out today “five long-term decisions” for his Government.
They are reducing debt, cutting tax, building sustainable energy, backing British businesses and delivering world-class education.
WATCH HERE: Rishi Sunak makes speech following Rwanda verdict
The most eye-catching of these was his pledge to start cutting taxes, almost certainly as soon as the Autumn statement on Wednesday. “It will take discipline and we need to prioritise. But over time we can and we will cut taxes.” Sunak said.
The question now is which taxes are for the chop? The priority remains for the Government not to do anything which risks driving up inflation after it fell to half its level in January – this is why the smart money is on cuts to business taxes to help entrepreneurs get the economy going, rather than cuts in personal taxes.
Fear of fuelling inflation is what had led to Tory MPs being briefed that No10 was looking at cutting inheritance tax. However, it now seems that Sunak and Hunt are moving away from that, perhaps stung by criticism that it would only benefit older people.
Sunak and Hunt will know how much fiscal headroom they have to make tax cuts. Paul Johnson from the respected Institute for Fiscal Studies, said today that he only had “a very, very small number of billions of pounds” to play with. Others say the figure is in the tens of billions of pounds.
Sunak and Hunt will know how much fiscal headroom they have to make tax cuts
Will the PM take the axe to National Insurance or Income Tax – two measures which could arguably shift the polls in favour of the Tories? Or perhaps provide firm guarantees of tax cuts in the future?
What we do know is that the speech from Sunak marks a change in the mood music, and is further evidence of attempts by the Tories to draw attention to what a Labour Government might do.
“Do you want a Government and a party that is committed to bringing down borrowing and debt and controlling public spending so that we can cut taxes?” the PM asked, as he drew attention to Labour’s plan for £28billion on green energy.
“Or do you want a Government and a party that is committed to borrowing £28billion more? “Because there is no way that if you are going to borrow £28billion more, you are going to be able to cut people’s taxes. It is as simple as that.”
The PM’s remarks today are a clear attempt to win over the 20 per cent of voters who his Chancellor Jeremy Hunt said at the weekend have not yet determined how they are going to vote.
As the PM found last week with the small boats ruling, voters are growing tired of pledges, they want to see some action to alleviate pressure on household budgets.
Suank said: “I want to cut taxes. I believe in cutting taxes.” The Autumn statement on Wednesday is when that will have to start.