Michael Gove sparked fears on Wednesday that millions of middle income families will not be offered direct extra help to cope with the spiralling cost-of-living crisis as he ruled out an Emergency Budget and a cut in VAT.
The Cabinet minister signalled that more financial support could be on the way for the least-well-off in society later this year as inflation soars towards double digits and energy bills have sky-rocketed.
But asked on LBC Radio whether the Government should call an Emergency Budget, lower VAT or review the rise in Corporation Tax, he said: “No, no, no,” echoing Margaret Thatcher.
Amid calls from business chiefs and Opposition MPs for a more urgent response to the cost-of-living crisis, he added: “I don’t think we need an Emergency Budget.“I do think that we need to make sure that we have the right balance between paying down our deficit, keeping the confidence of international markets and keeping interest rates as low as possible, with also targeting help on the very poorest.”
Asked earlier on Sky News where the Government would put “shield” to protect people from the cost-of-living crisis, Levelling-Up Secretary Mr Gove suggested it would benefit the less-well-off in society but did not signal it would necessarily help millions of people on middle incomes.
“We try to protect those who are most vulnerable,” he said.
“We have already taken steps for example by reducing Council Tax for people who are in particular Council Tax bands who tend to be at the lower end of the income spectrum.
“But we also keep under review a range of things that we can do both short term and long term to help people, so for example in the Queen’s Speech yesterday there are steps that we are taking to protect people who are renting, both those in the private rented sector and those who are also in social homes, in order to ensure that we can have security for them as well.”
Mr Gove also told how a meeting of Cabinet ministers on Tuesday had discussed a range of issues to ease the cost-of-living crisis, which could benefit more than just people on low incomes, with measures having been floated including making MOTs compulsory once every two years rather than annually.
Boris Johnson told his top team to make sure that they were all doing “everything that we could to review every policy lever at our disposal” in order to ensure the Government could help people counter soaring prices, he added.
He stressed that there was a package of measures in the Queen’s Speech to support people, such as new regulations on renting.
“But it’s also the case that we don’t just rest there,” he added.
“We are always in every way looking to see at what we can do to help citizens.”
However, Tony Danker, Director-General of the CBI, called for “more flexibility” from the Government rather than delay any new financial help until an autumn Budget.
He told BBC Radio 4’s Today Programme: “There’s a debate about whether or not do we need an Emergency Budget, ie this week six weeks after a spring statement. I am not sure that’s entirely necessary but nor do I think that we need to stand on principle and we all have to wait until November because that’s the good order of things.
“There’s a few things the Government need to tackle in any budgetary measures - the first is obviously the cost of living - those hardest hit, the second is this business confidence and investment, the third is that aggregate demand in the economy, everybody spending in shops. If we wait until November to do all of that then the economy will end up in more trouble. “So a bit more flexibility please from the Prime Minister and Chancellor.”
Mr Gove dismissed claims of a split between Mr Johnson and Chancellor Rishi Sunak over the need for an Emergency Budget as being “overinflated”.
He told BBC Breakfast: “It is an example of some commentators chasing their own tails and trying to take a statement that is common-sensical, turning it into a ‘major’ capital letters ‘big news story’.
“When the Treasury quite rightly say ‘calm down’, people instead of recognising that they have overinflated the story in the first place then say ‘Oh, this is clearly a split’.
“The truth is the Prime Minister says ‘Government is working hard’ and the Treasury say ‘Yes we are and I’m afraid the Budget is going to be when we said it would be’. That becomes a story? No.”
However, Opposition MPs also piled pressure on the Government for faster action.
Shadow Chancellor Rachel Reeves said: “The Conservatives out of ideas and out of touch.
“They should bring in an Emergency Budget urgently, with a one-off windfall tax on oil and gas producer profits we can cut household bills by up to £600 and support businesses through the cost of living storm.”
Lib Dem Treasury spokesperson Christine Jardine MP branded the Government’s handling of the cost-of-living crisis as a “complete shambles”.
She added: “Millions of families and pensioners are struggling to get by. They need more help now before things get even worse in the autumn.
“An emergency budget is needed now to cut taxes for ordinary families while taxing the super profits of oil and gas companies. That would be the fair and right thing to do.”
