Sunak 'can't solve every problem' as Tories demand fuel duty cutMarch 18, 2022
Rishi Sunak warns he ‘can’t solve every problem’ as Tories demand fuel duty is slashed to ease cost of living crisis in mini-Budget next week – but vows he DOES want to cut tax in coming years
- Rishi Sunak has made appearance on stage at the Tory conference in Blackpool
- Chancellor warned he ‘can’t solve every problem’ amid the cost of living crisis
- Played down idea of big moves on tax cuts in the Spring Statement next week
Rishi Sunak today warned that he ‘can’t solve every problem’ as he poured cold water on Tory demands for fuel duty to be slashed in next week’s mini-Budget.
Speaking at the party’s Spring conference in Blackpool, the Chancellor insisted he had ‘enormous sympathy’ for people being hammered by soaring inflation and energy costs.
But he defended the eye-watering national insurance rise and tax threshold freezes due to take effect next month, saying the government needed to do ‘difficult’ things to get the public finances under control.
Instead he tried to appease restive Conservatives by vowing that he will ‘prioritise’ cutting taxes in the coming years, stressing his own Thatcherite outlook.
Speaking at the party’s Spring conference in Blackpool, Chancellor Rishi Sunak insisted he had ‘enormous sympathy’ for people being hammered by soaring inflation and energy costs
Wages have been struggling to keep pace with soaring inflation over recent months
Families are facing more mortgage pain after the Bank of England lifted the base rate from 0.5 per cent to 0.75 per cent as it scrambles to deal with spiking price rises
The comments came with MPs warning that the country could be headed for a ‘de facto lockdown’ as people are unable to travel to work due to spiking fuel costs amid the Ukraine standoff.
Families are facing more mortgage pain after the Bank of England lifted the base rate from 0.5 per cent to 0.75 per cent as it scrambles to deal with spiking price rises.
The Bank admitted that inflation looks likely to sail past its prediction of a 7.25 per cent peak, potentially by several percentage points, in the wake of the Ukraine war.
The headline rate has not been in double figures since the dark days of the early 1980s.
However, while the Bank’s main remit is to control inflation, the global nature of the problems means the lever of interest rates might only have a marginal effect.
UK plc is already expected to suffer a severe slowdown with anxiety that it could even slip into recession amid soaring prices – the dreaded ‘stagflation’ scenario.
Pressure has been mounting on Mr Sunak – including from within Cabinet – for significant action in the Spring Statement next Wednesday.
But he played down the prospect of major steps today arguing that factors like global inflation are ‘somewhat out of my control’.
Interviewed on stage in Blackpool by local Tory MP Paul Maynard, Mr Sunak said: ‘It is about taking stock of the situation which, of course, is difficult.
‘I can see that, and I have enormous sympathy for what people are going through at the moment and that’s why we will always be there to help make a difference where we can.
‘I can’t solve every problem, no government can solve every problem, particularly when you are grappling with global inflationary forces – they are somewhat out of my control.
‘But as you saw a month or so ago when we announced the very significant intervention to help people meet some of the additional costs of energy bills, where we can make a difference, of course I can – I’m always going to do that, we’ve done it over the last two years.
‘So, we will have an update on the situation and a little bit of a look forward to where we are heading.’
Mr Sunak said it had been necessary to put up taxes to rebuild the public finances following the Covid-19 outbreak, but suggested there would not be more increases.
‘That is done. We have made the difficult decisions that we had to make. My priority going forward is to cut taxes. I made that very clear at the Budget,’ he said.
Mr Sunak defended the rises he had introduced, saying it would not have been ‘economically responsible’ not to have addressed the problems caused by the pandemic.
‘I did not get into this to have to put up people’s taxes. I’m Conservative, I’m a Conservative chancellor, it’s the last thing I wanted to do,’ he said.
‘I also take really seriously my responsibility to you, our kids and to the nation’s finances and making sure we fixed the problems that coronavirus caused where our borrowing went up to levels we haven’t seen since World War II and our debt was forecast to keep growing and growing and growing into the future.
‘I didn’t think that was right. I didn’t think it was morally right. I didn’t think it was economically responsible. It was not easy but I do believe it was the right thing to do.’
The respected Institute for Fiscal Studies think-tank has highlighted that the Chancellor is in line for a huge windfall after his decision to freeze tax thresholds – which many MPs say has given him room for action.
The move had been expected to raise £8billion a year when it was announced last Autumn.
Interviewed on stage in Blackpool by local Tory MP Paul Maynard, Mr Sunak played down the prospect of major steps to address the cost of living
CPI inflation is already running at a 30-year high and is expected to top 8 per cent
There have been concerns that the Russia standoff could trigger a repeat of the Oil Shock in the 1970s, when inflation and interest rates spiked
However, since then inflation has soared, and is now predicted to peak at more than 8 per cent.
As a result the additional revenue from so-called ‘fiscal drag’ – effectively reducing the thresholds in real terms – is likely to be over £20billion a year, according to the IFS.
That is on top of the £13billion national insurance hike taking effect next month, and underlines the scale of the tax drive Mr Sunak has been forced to embark on in the wake of Covid.
He has batted away calls for early tax cuts to ease the cost of living crisis, warning that the public finances are vulnerable due to the £2.3trillion debt mountain.
There will also be extra costs for the government from debt interest and higher energy bills. But Tories seized on the IFS calculations to renew calls for cuts to fuel duty and VAT.
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