Jeremy Hunt on Monday firmly kept ajar the door to pre-election tax cuts but told an increasingly fractious Tory party that there would be “no short cuts” and landmark reforms would be needed.
In his keynote speech to the Conservative annual rally in Manchester, the Chancellor was set to “chart a path to a lower tax economy”. But he earlier rebuffed growing calls from senior Tories for tax cuts to be announced now. Ahead of unveiling a series of major public policy changes, he stressed: “If we are prepared to walk this difficult path it is possible to bring down taxes, and we won’t hesitate to do that. But we can’t say when it will be possible.”
He notably ruled out tax cuts this year but kept the prospect of them dangling for next year when the general election is set to happen, most likely in the autumn. “If we were to give a big tax cut this year, that would be inflationary,” he told BBC Breakfast.
Pressed about next year, he responded: “I don’t have a crystal ball. But if you’re asking me do I want to bring down the tax burden? The answer is absolutely yes”. He added: “We need to make it easier for businesses to expand. We need to spend taxpayers’ money more efficiently. We need reforms to welfare.”
Key elements of Mr Hunt’s blueprint to axe the tax burden, which has risen to its highest level since the Second World War, include:
- Welfare reforms, with a stronger sanctions regime so that claimants are “actively engaging” in getting a job, and doing more to keep individuals, with mental health issues and physical disabilities, in work rather than “automatically” signing them off work. The National Living Wage will increase to at least £11 an hour from April.
- Better spending of public money, with major reforms including embracing AI to make funding for public services stretch further.
- Reforms to make it easier for businesses to grow. This follows complaints from firms that Brexit red tape is hitting their exports.
Mr Hunt, though, is facing open calls for tax cuts at the conference where senior Right-wingers were seen to be manoeuvring for a post-election leadership contest. Amid gloom among some Tories, the main hall was at times eerily empty, possibly at least partly due to the Aslef train strikes.
Former Tory leader Sir Iain Duncan Smith insisted that reducing the tax burden was a “must”. He told LBC Radio: “We should look at the dynamic effect… and give people back some of their money.”
Former home secretary Dame Priti Patel added: “We do need to look at how Conservatives in government continue to cut taxes.”
Prime Minister Rishi Sunak and Mr Hunt are promising large-scale reforms as they seek to position themselves as the party of change despite the Tories being in power for 13 years.
Mr Sunak’s scaling back of net zero actions may have given him a small poll boost but Labour is still at least around 10 points ahead.
Former premier Liz Truss, whose disastrous mini-budget unleashed economic chaos, was at conference pushing her growth agenda and calling for Corporation Tax to be cut to 19p. But Mr Hunt said: “What I’m going to be saying to Liz Truss, everyone up here in Manchester this afternoon, is that if we want faster growth, if we want an end to taxes getting ever higher, it is possible, but there aren’t any shortcuts.”
