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Rishi Sunak not ruling out further tax hikes ahead of Tory conference speech

·4-min read
Chancellor Rishi Sunak (Hannah McKay/PA) (PA Wire)
Chancellor Rishi Sunak (Hannah McKay/PA) (PA Wire)

Chancellor Rishi Sunak has refused to rule out further tax hikes as he faces pressure from within the Conservative Party about the historically high tax burden.

Ahead of his first in-person speech to the Tory Party conference as Chancellor, Mr Sunak did not dismiss the possibility that increases to income tax or council tax may be imposed.

He will use his speech in Manchester on Monday to commit more than £500 million in fresh funding to help people back into work as he seeks to stem the continuing turbulence of the coronavirus pandemic.

Mr Sunak is shifting the focus on to getting people into new or better jobs as the Government comes under sustained pressure over a major squeeze on living standards.

Prime Minister Boris Johnson and Chancellor Rishi Sunak (Jonathan Brady/PA) (PA Wire)
Prime Minister Boris Johnson and Chancellor Rishi Sunak (Jonathan Brady/PA) (PA Wire)

But the extra funding comes with Mr Sunak and Boris Johnson under pressure from within the Tory ranks about the historically high tax burden, after they raised national insurance contributions by 1.25%.

The Chancellor was asked repeatedly about whether he would approve further tax increases, including a hike to council tax to help fund social care after a warning from local authorities.

Mr Sunak told Sky News he would not “pre-empt” the local government finance settlement later in the year and added to LBC he “never can comment about future tax policy”.

Asked about a possible increase to income tax before the next election, he told BBC Breakfast: “Recently we did make a significant announcement on tax and it was a difficult decision to make, especially for a Conservative Chancellor and a Conservative Prime Minister.

“But we took that decision because we wanted to make sure the NHS got the significant funds it requires to help recover strongly from coronavirus.”

Funding for the new jobs package in his conference speech will not be set out until the spending review and Budget later this month.

Commons Leader Jacob Rees-Mogg has warned that taxation has hit “the limit”.

Mr Sunak suggested it was his duty as Chancellor to tell the Prime Minister not to overspend after joking that he would cut up Mr Johnson’s “credit card” to rein back his public spending.

We can’t wave a magic wand. There’s nothing I can do about the decision by a country in Asia to shut down a port because of a coronavirus outbreak

Chancellor Rishi Sunak

“That was an old thing but I think that’s something all chancellors say as part of our job,” Mr Sunak told BBC Radio 4’s Today programme.

Mr Sunak was also forced to defend the decision to end the £20-a-week uplift to Universal Credit as families and workers face financial hardship, in a move some Tories have campaigned against.

And he conceded it is likely there will be shortages this Christmas, as the strains of coronavirus are compounded by a shortage of workers stemming from Brexit.

“We’re seeing supply disruption not just here but in lots of different places and there are things we can try and mitigate and we are,” Mr Sunak told Today.

“But we can’t wave a magic wand. There’s nothing I can do about the decision by a country in Asia to shut down a port because of a coronavirus outbreak.”

In his conference speech, Mr Sunak will announce the new funding will be used to help workers leaving the furlough scheme and unemployed over-50s back into work.

The “kickstart” scheme helping young people on Universal Credit will be extended to March next year under the measures and the £3,000 incentive for new apprentices will be extended until the end of January.

But the Chancellor’s speech comes at a difficult time for the economy, with warnings of a cost-of-living crisis for some households who face rising energy bills, price hikes in shops and a cut to Universal Credit.

Shadow work and pensions secretary Jonathan Reynolds (Gareth Fuller/PA) (PA Wire)
Shadow work and pensions secretary Jonathan Reynolds (Gareth Fuller/PA) (PA Wire)

Household budgets will sustain a further blow next April when national insurance contributions rise by 1.25% to help fund the NHS and social care.

Shadow work and pensions secretary Jonathan Reynolds said the package “will do nothing to compensate for the Chancellor’s tax rises, cost-of-living crisis and cuts to Universal Credit which are set to hammer millions of working families”.

In the other main speech at the conference on Monday, Brexit minister Lord Frost will warn the European Union that the Northern Ireland Protocol risks undermining the Good Friday Agreement.

He believes the threshold for triggering Article 16 has been met – which could allow him to suspend parts of the post-Brexit arrangements.

Lord Frost will tell Brussels that “tinkering at the edges” will not fix the problems with the protocol, and will urge the EU to be more “ambitious” in finding solutions to the issues around Northern Ireland’s post-Brexit trading arrangements.

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