Chancellor Jeremy Hunt has dashed any hopes of lowering taxes anytime soon by saying that the “best tax cut right now is a cut in inflation”.
"The biggest and quickest tax cut that the prime minister and I can deliver for families up and down the country is to halve inflation," he said.
"That is eating away at people's pay packets, their spending power.
"We recognise that a low tax economy is one of the vital ingredients for dynamism, entrepreneurialism, to encourage people to take risks and that's why we want to do it when the time is right."
During a speech at Bloomberg’s London HQ, Jeremy Hunt said the government will look to cut taxes only "when the time is right".
He added: "We are committed, as I made very clear, to a low tax economy. The difference between Conservatives and Labour is that we cut taxes when we can, they never do and that is because we recognise that a low tax economy is one of the vital ingredients for dynamism, entrepreneurialism, to encourage people to take risks and that is why we want to do it when the time is right."
In order to boost the creation of more new businesses, “firstly we need lower taxes”, he argued.
“High taxes directly affect the incentives which determine decisions by entrepreneurs, investors or larger companies, about whether to pursue their ambitions in Britain”
Hunt added: “Sound money must come first but our ambition must be nothing less than to have the most competitive tax regime of any major country.”
That means “restraint” on tax spending: “In case anyone is in any doubt about who will actually deliver that restraint to make a low tax economy possible, I gently point out that in the three weeks since Labour promised no big government chequebook they have made £45bn of unfunded spending commitments.
The chancellor said he wanted to reverse what he called a “declinism” attitude in the UK, declaring that the country’s economy had “grown at about the same rate as Germany” since the 2016 European Union referendum.
He also dismissed “gloom” around the prospects for the economy and said the UK government will bring about prosperity in a plan “energised” by Brexit.
“It is a plan necessitated, energised and made possible by Brexit which will succeed if it becomes a catalyst for the bold choices we need to take,” he said.
“The desire to move to a high-wage, high-skill economy is one shared on all sides of that debate.
“We need to make Brexit a catalyst for the bold choices that will take advantage of the nimbleness and flexibilities that it makes possible.”
Unveiling proposals to drive regional economic prosperity, the Cabinet minister said the Treasury would be identifying investment zone sites that could be turned into “mini-Canary Wharfs”.
The regeneration of the docklands area since the 1980s has led to the creation of a major financial centre in east London.
Rachel Reeves, Labour’s shadow chancellor, said: “Thirteen years of Tory economic failure have left living standards and growth on the floor, crashed our economy, and driven up mortgages and bills.
“The Tories have no plan for now, and no plan for the future. It’s time for a Labour government that will build a better Britain.”
Liberal Democrat Treasury spokeswoman Sarah Olney said: “This Conservative Party sounds like an unfaithful partner asking for yet another chance.
“But after crashing the economy and sending mortgages sky high, why should we trust them again?
“Jeremy Hunt’s speech is cold comfort for families and pensioners facing unbearable price rises.”