Rishi Sunak has declined to apologise for the mistakes of Liz Truss’s government that are expected to add billions of pounds of tax hikes and spending cuts to his budget.
The Prime Minister instead insisted on Tuesday that he will make “difficult decisions that are required to fix” the missteps of his Conservative predecessor in No 10.
Chancellor Jeremy Hunt is looking to find up to £60 billion from a combination of hikes and spending cuts in his autumn statement on Thursday.
Economists at the Resolution Foundation have calculated that Ms Truss’s disastrous so-called mini-budget exacerbated the problem to the tune of £30 billion, while causing chaos in the mortgage market.
During a round of broadcast interviews in Bali, where Mr Sunak is attending the G20 summit, he repeatedly refused to apologise for the Tories’ handling of the economy.
Instead, when pressed by Sky News, Mr Sunak said he has acknowledged “mistakes were made”, adding: “What I want to do now is fix them”.
“I think I demonstrated over the summer that I’m prepared to be honest with the country about the challenges we face and to make the difficult decisions that are required to fix them,” he said.
He did not repeat the comments of his Chancellor that “we’re all going to be paying a bit more tax” but said the approach on Thursday will be “fair and compassionate”.
Mr Sunak told BBC News: “The number one challenge we face is inflation. We’re not alone in that, actually, for example, Germany and Italy have inflation that is even higher than ours at the moment.
“And it’s important that we get a grip of that, it’s important that we limit the increase in mortgage rates that people are experiencing. And the best way to do that is to get a grip of our borrowing levels and have our debt on a sustainable basis falling.”
Mr Sunak’s premiership is so far being dogged by strikes, with nurses and civil servants preparing to join rail workers in taking action over issues including pay.
With the Prime Minister having so far kept in place the abolition of the cap on bankers’ bonuses, he urged bosses to keep down their pay in order not to exacerbate inflation.
“Of course I would say to all executives to embrace pay restraint at a time like this and make sure they are also looking after all their workers,” he told ITV News.
Mr Sunak said the scale of food bank use in the UK is “obviously a tragedy”, amid a worsening cost-of-living crisis.
“I’ve got enormous admiration and gratitude for the people who are providing them in my constituency and elsewhere as well,” he told ITV.
“But I do of course want to get to a position where no one needs to use a food bank.”
The Resolution Foundation believes that Ms Truss’s remaining unfunded tax cuts, from national insurance and stamp duty cuts, cost nearly £20 billion.
The think tank calculates that higher interest rates sparked by her partially axed economic vision have cost the nation £10 billion, with higher costs of borrowing.
On Sunday, Mr Hunt warned that “sacrifices” are required across the board to get the economy back on track, telling Sky: “We’re all going to be paying a bit more tax, I’m afraid”.
The budget is widely expected to raise finances through stealth taxes by freezing the rates in which workers begin paying higher rates of tax. Inflation and pay increases will mean more people being dragged into higher bands.
Mr Hunt is understood to be considering hiking the amount that local authorities can increase council tax by without holding referendums.
The threshold for when the 45% rate of income tax kicks in for the highest earners could be decreased from £150,000 to £125,000.
Mr Hunt is expected to make the support plan for energy bills less generous from April, instead switching to more targeted measures in order to save the Treasury billions.
He is considering increasing the windfall tax on oil and gas giants from 25% to 35% while also expanding the levy to electricity generators.
The cap on social care costs announced by Boris Johnson is expected to be delayed by at least two years.