Rishi Sunak has hinted at business tax cuts to boost economic growth as he promised to reduce the tax burden “carefully and sustainably” and “over time”.
In a speech on Monday the prime minister declined to give any specifics before the autumn statement, but stressed the focus was “very much the supply side” of the economy in a signal that business tax cuts are more likely than personal ones.
However, the prime minister’s announcement of what are intended to be five new key economic priorities almost went unnoticed at an event that was overshadowed by questions about the scale and type of tax cuts the chancellor, Jeremy Hunt, may make in Wednesday’s autumn statement.
Britain faced a choice between a “big government” of high spending and taxes, which Sunak said had been necessary in recent years, and a change in approach, which would attempt to grow the economy through the “dynamism of the private sector”.
Now that inflation had been halved, he said, the government would take “five long-term decisions” as part of the “next phase” of the government’s economic plan after a fall in inflation to 4.6% in October.
He listed them as: reducing debt, cutting tax and rewarding hard work, building domestic and sustainable energy, backing British business, and delivering world-class education.
The priorities went largely unnoticed by the media until journalists approached Downing Street afterwards and were told they were intended to be a significant moment.
They do not replace Sunak’s “five priorities” – ranging from halving inflation to “stopping the boats” – but were outlined in a speech at a north London college where the Conservative leader previewed the ways in which he was likely to differentiate his party from Labour in an election campaign.
As Hunt and a range of other ministers listened in the front row, Sunak used the speech to hint at business tax cuts to boost economic growth as he promised to reduce taxes “carefully and sustainably”.
Sunak said: “Now that inflation is halved and our growth is stronger, meaning revenues are higher, we can begin the next phase, and turn our attention to cutting tax.
“We will do this in a serious, responsible way based on fiscal rules to deliver sound money and alongside the independent forecasts of the Office for Budget Responsibility.
“And we can’t do everything all at once. It will take discipline and we need to prioritise. But over time, we can and we will cut taxes.”
After the speech to an audience of local business and community leaders, Sunak said the welfare system was not “sustainable” when asked about a possible squeeze on welfare payments in the autumn statement.
Declining to “pre-empt” any announcements on Wednesday, the prime minister said: “Our view on the welfare system is that it should be compassionate, it should be fair and it should be sustainable …
“With over 2 million people of working age who are not currently working, that isn’t a good situation. It’s not sustainable for the country, for taxpayers. It’s not fair. But it’s also not compassionate to write people off,” he added.
In other sections of his speech, Sunak sought to portray the Labour party as being in the pockets of trade unions and attempted to contrast his and Jeremy Hunt’s experience of being in business to his opponents, who he said “have no experience whatsoever over running a business”.
Seeking to draw clear a dividing line with Labour over economic credentials, he told a Q&A after his speech: “That will be the very clear choice at the next election: a Conservative party that is delivering lower taxes because we have now halved inflation and control spending, or a Labour party that’s just going to borrow an enormous amount more, not having learned the lessons at all of not just the last 10 years, but of the last two years, and continue with the same failed prescription, which is more government, more borrowing, more spending.”
