Chancellor Rishi Sunak today signalled that Britain will have to wait until after the next general election for tax cuts, as he told the Conservative conference in Manchester that putting the economy back on a “sustainable footing” must come first.
Both Sunak and Boris Johnson have this week shied away from traditional Tory promises to take less of voters’ money, with the prime minister saying only that he would try not to increase the tax burden – currently at his highest level since the Second World War – “if I can possibly avoid it”.
In his keynote speech to conference, Mr Sunak stressed that getting the economy on an even keel after the £400bn cost of the Covid pandemic must take priority over lowering taxes.
“Our recovery comes with a cost,” he told delegates. “Our national debt is almost 100 per cent of GDP.
“So we need to fix our public finances. Because strong public finances don’t happen by accident. They are a deliberate choice. They are a legacy for future generations and a safeguard against future threats.”
Speaking only weeks after imposing a 1.25 per cent rise in national insurance contributions to pay for the NHS and social, care, the chancellor said: “Whilst I know tax rises are unpopular, some will even say un-Conservative, I’ll tell you what is un-Conservative: Unfunded pledges, reckless borrowing and soaring debt.
“Anyone who tells you that you can borrow more today and tomorrow will simply sort itself out just doesn’t care about the future.
“Yes, I want tax cuts. But in order to do that, our public finances must be put back on a sustainable footing.”
The chancellor’s comments come amid reports that he will set out plans in his budget later this month to stop borrowing to fund day-to-day spending within three years and to get underlying debt falling by 2024-25.
Mr Sunak used his speech to announce £23m funding to create 2,000 artificial intelligence (AI) scholarships for disadvantaged students and £11m to double the number of AI fellowships under the government’s Turing scheme.
“As the latest general-purpose technology, AI has the potential to completely transform whole economies and societies,” said the chancellor.
“We want the UK to be a scientific superpower but also a high-skilled, high-tech economy.
“This new fund will allow more young people from disadvantaged backgrounds to learn new skills and train up for the jobs of tomorrow in the new and exciting industries of the future such as AI.”
And he confirmed a £500m fund to get workers back into jobs after the end of furlough, with additional support for younger people and over-50s.
TUC general secretary Frances O’Grady said Mr Sunak had failed to provide “a serious plan for raising living standards”.
“If the Chancellor wants to get wages rising he shouldn’t be freezing the pay of millions of key workers,” said Ms O’Grady.
“He should instead bring in fair pay-bargaining so unions and employers can negotiate higher pay in sectors across the economy, especially in social care, logistics and food production. And he should target increases to the national minimum wage and ban zero-hours contracts.
“And with the country facing a cost of living crisis, Rishi Sunak should immediately reverse the cut to universal credit.”
