Rishi Sunak is preparing to embark on a Thatcherite programme of tax cuts in tomorrow’s Autumn Statement, after the Chancellor was handed a £17bn borrowing boost.
The Government has been weighing up plans to slash National Insurance payments, raise the 40 per cent income tax threshold and cut inheritance tax before the General Election.
Changes to inheritance tax was seen as a way of cutting taxes without contributing to inflation, but popular scepticism of cutting tax for the wealthiest people during the cost of living crisis appears to have steered the Treasury away from the move, with Chancellor Jeremy Hunt said to be planning to delay the move.
Giving a speech on the economy yesterday, just two days before the Autumn Statement, Sunak confirmed that tax cuts are coming.
But he caveated the pledge, insisting that it is not possible to “do everything all at once”.
The Government borrowed £16.9bn less than official figures predicted in the first seven months of the year, contributing to hopes that the UK will see tax cuts in Jeremy Hunt’s Autumn Statement tomorrow.
Yesterday, the PM said: “Now that inflation is halved and our growth is stronger, meaning revenues are higher, we can begin the next phase and turn our attention to cutting tax.
“We will do this in a serious, responsible way based on fiscal rules to deliver sound money and alongside the independent forecasts of the Office for Budget Responsibility.
“And we can’t do everything all at once. It will take discipline and we need to prioritise.
“But over time, we can and we will cut taxes.”
Sunak said the focus would be on “cutting tax and rewarding hard work”.
Promising a number of welfare reforms to incentivise work, the Prime Minister added: ““We believe in the inherent dignity of a good job, and we believe that work, not welfare, is the best route out of poverty,”
Sunak is said to see his approach, which involves cutting inflation before cutting tax, as following that of Margaret Thatcher.