Rishi Sunak has promised to reward hard work with tax cuts as he struck an optimistic note over the UK’s economic prospects.
Official figures next week may show the UK slipped into a technical recession at the end of last year, while the prime minister is facing a heavy opinion poll deficit against Labour and criticism from within his own party.
But in an interview with The Times this weekend, Mr Sunak told Tory rebels he was “totally up for the fight” as he looked to paint a rosier picture of the country’s economic future.
“Because economic conditions have improved, because the plan is working, you are starting to see mortgage rates come down and we have been able to cut taxes,” he said.
“I do believe those pressures are starting to ease and that hopefully over the course of this year we can continue to make even more progress.”
But although he said “there is a sense that the country is pointing in the right direction,” he struck a cautious note, saying that taxes would only be slashed “when it is responsible to do so”.
Chancellor Jeremy Hunt announced a 2% cut – from 12% to 10% – in national insurance in November.
Jeremy Hunt has sought to temper expectations. Pic: Reuters
Many economists said his autumn statement had factored in implausible public spending squeezes, while the International Monetary Fund said further tax cuts in his 6 March budget could put at risk the government’s ability to invest in the NHS and other vital services.
Mr Sunak appeared to echo his chancellor, who has already sought to temper expectations over the size of any tax cuts in his spring budget, despite senior Tories publicly indicating they are coming.
“None of us ever talk about this stuff before budgets,” he said.
“Other people are. I think they’re over-interpreting. What the chancellor and I have said is that of course our long-term plan is to cut people’s taxes.”
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The prime minister hinted the spring budget could see a further national insurance cut – telling the paper he and his party believe “hard work should be rewarded”, adding: “Cutting national insurance is a very direct way to do that.”
Labour’s shadow chief secretary to the Treasury, Darren Jones, said: “Rishi Sunak’s words will ring hollow to the millions of families across Britain who have been left worse off after 14 years of Conservative failure.
“There have been 25 Tory tax rises since the election and the average household is set to be £1,200 worse off under Rishi Sunak’s tax plan.
“It’s time for a change and a Labour government with a plan to invest in Britain’s future.”
His promise to slash taxes came after the publication of his own tax summary, which showed he paid more than £500,000 in UK tax last year, as his total income rose to £2.2m.
The document showed he paid an overall tax rate of about 23% of his annual income – about the same as a teacher – sparking calls for tax reform.
