UK Politics

The chancellor Nadhim Zahawi has attempted to turbo-charge his leadership bid with a raft of tax cut pledges, despite warnings from a Tory grandee they risk fuelling inflation.In a speech to Conservative activists, Mr Zahawi promised to cut the basic rate of tax to 19p and then 18p next year and the year after. He also pledged to scrap VAT and green levies on energy bills for two years, reverse the planned corporation tax rise and ensure tax falls as a percentage of GDP every year if he became prime minister.But former chancellor Lord Lamont criticised Tory leadership candidates “thinking that you can grow your way out of inflation” and argued that “unfunded, irresponsible tax cuts” would drive up interest rates and lead to a weaker pound.RecommendedThe Conservative peer told Radio 4’s World At One programme: “You can’t grow your way out of inflation, you’re just likely to add to it if you attempt to do that.”And there’s a real danger if you cut taxes, let’s say cut VAT in order to increase spending, to boost the economy, all you get is a very temporary boost and then you get more inflation”.He added: “I don’t suppose many people want to see interest rates above the level of inflation, but if we start giving unfunded, irresponsible tax cuts, the Bank of England will be faced with difficult choices indeed”.As Tory leadership candidates line up to pledge large tax cuts, experts warned the promises were “not serious”.Torsten Bell, chief executive of the Resolution Foundation, said that some “individual” taxes could be reduced “at the margins” but warned the kind of large-scale cuts being discussed “aren’t plausible”.He said: “You are not going to be cutting corporation tax by 10 percentage points and cutting national insurance and income tax.”The trade-off in terms of slashing public services like the NHS and defence is something politicians are unlikely to be willing to do.”Carl Emmerson, the deputy director of the highly respected Institute for Fiscal Studies think tank, said soaring inflation meant the government already had less scope for change than when it set out its spending plans last October.He said: “When you are setting public sector pay deals, you might find the kind of pay awards that workers might expect – and the kind of awards that pay bodies might recommend – could lead you to decide that it’s difficult to maintain current spending levels, let alone trim them.”The war in Ukraine meant ministers faced extra pressure on the budget, he added.Almost all the Tory leadership candidates have committed to significant tax cuts.RecommendedSeveral have pledged not just to scrap a planned rise in corporation tax to 25%, but also to reduce it to 15%. More

Sajid Javid, a candidate in the Conservative party leadership contest, has declined to say where he held an offshore trust.Mr Javid retained the trust while he was an MP and a PPS in the Treasury – a ministerial aide who acts as the chancellor’s eyes and ears in parliament.On Sunday, Mr Javid joined Nadhim Zahawi MP, another leadership contender and now chancellor, in saying he would agree to make his tax affairs public if elected as leader.Mr Javid said in an interview with BBC Sunday Morning when asked about publishing his tax returns: “I have no issue with transparency like that. I think if I get the final two, the final two candidates should be quite open about their tax affairs.”However, Mr Javid – who resigned as Health Secretary last week – has today declined to say in which location his offshore trust was actually held.RecommendedHe previously said he dissolved the trust when he became a government minister in 2012 and incurred 50 per cent income tax “on those assets” – the “heaviest possible tax burden”.Mr Javid also said in April that he had always declared the information required by tax, government and parliamentary authorities.The former chancellor revealed that he had used non-dom status up to 2009 earlier this year. This is an entirely legal mechanism that allows people to reduce their UK tax bill on their worldwide income. He told the BBC that he had used non-dom status on his tax returns for about “four or five years” in the 2000s.Mr Javid issued a statement clarifying his tax affairs in April, after The Independent revealed that Rishi Sunak’s wife, Akshata Murty, had used the same route to minimise her UK tax bill. Ms Murty subsequently announced that she would pay UK taxes on her worldwide income.The ministerial code states that although PPSs are not technically members of the government “they must ensure that no conflict arises, or appears to arise, between their role as a parliamentary private secretary, and their private interests”.Mr Javid’s trust was not listed in his entry in the register of members’ interests in 2011, but he did declare a shareholding in Deutsche Bank, his former employer.In April, a spokesman for Mr Javid declined to say if the assets in the trust – which Mr Javid said in a statement he dissolved in 2012 – included these Deutsche Bank shares as well as other assets, including shares in different companies. They also declined to say whether this trust was operated as a blind trust or under a blind management arrangement, or say where it was located.RecommendedDuring his time as a banker, Mr Javid was linked to Dark Blue Investments, an employee benefit trust via which staff were paid share bonuses via specially created entities in order to avoid income tax. The supreme court ruled that tax ought to be paid on these bonuses.Experts have also queried Mr Javid’s use of non-dom status, given that he was born in the UK and therefore would have had to declare that he did not intend to live in the country in the long term in order to use the mechanism.Tax transparency has become a flashpoint amid the leadership campaigns after Mr Zahawi claimed that he was the subject of a smear campaign.He has vowed to publish his tax returns if he wins the race and becomes prime minister, following The Independent’s revelation that HMRC experts are investigating his financial affairs.The leadership hopeful claimed to be the victim of a “smear” campaign – but vowed to “answer any questions that HMRC has of me” and publish his accounts annually if he succeeds Boris Johnson at No 10. More

A crowded field of contenders is vying to replace Boris Johnson as the next Conservative Party leader and British prime minister.A look at the 11 people who have thrown their hats into the ring: ___RISHI SUNAK, FORMER TREASURY CHIEFSunak, 42, is the best-known of the Conservatives’ leadership contenders and a bookmakers’ favorite to succeed Johnson.RecommendedHe became a household name after becoming Treasury chief in 2020, handing out billions of pounds to help businesses and workers during the coronavirus pandemic. But he has faced criticism for not doing enough to ease the growing cost-of-living crisis. His popularity also took a dive after he was fined by police for attending one of the lockdown-flouting parties at Downing Street.___LIZ TRUSS, FOREIGN SECRETARYTruss, 46, took on the high-profile Cabinet post in September after serving as trade minister. She is also the U.K.’s lead negotiator with the European Union on issues following Brexit.Truss, who is popular with many Conservatives, said she wants to cut tax “from day one” and reverse an income tax hike.___PENNY MORDAUNT, TRADE MINISTERMordaunt, 49, is regarded by bookmakers as a party favorite to win. She was the first woman to serve as U.K. defense secretary, though she was dismissed by Johnson shortly after he became prime minister in 2019 because she had backed another candidate, Jeremy Hunt. Mordaunt, a former reality TV contestant, played a prominent role in the pro-Brexit campaign in 2016. ___SAJID JAVID, FORMER HEALTH SECRETARYJavid, 52, has wide experience in government having held the posts of health secretary, Treasury chief and home secretary as well as leading departments for business, culture and housing.The son of a bus driver who arrived in England from Pakistan, Javid made it to the final four in the contest to replace Theresa May as Tory leader in 2019.___NADHIM ZAHAWI, TREASURY CHIEFZahawi, 55, came to prominence as vaccine minister during the pandemic. A co-founder of the market research firm YouGov, Zahawi was elected to Parliament in 2010. He was born in Iraq to a Kurdish family and came to the U.K. as a child when his parents fled Iraq under Saddam Hussein.___GRANT SHAPPS, TRANSPORT SECRETARYShapps, 53, was a Johnson loyalist. He has served as Cabinet minister under both Johnson and his predecessor David Cameron, and was co-chairman of the Conservative Party from 2012 to 2015.Like many others in the contest, he has also pledged to curb taxes.___JEREMY HUNT, FORMER CABINET MINISTERHunt, who has served as both health and foreign secretary, ran against Johnson in the 2019 leadership race. He lost heavily, and was dumped from the Cabinet.Hunt, 55, has remained a lawmaker and kept himself in the public eye by grilling the government’s pandemic policies as head of Parliament’s Health and Social Care Select Committee.___TOM TUGENDHAT, COMMONS FOREIGN AFFAIRS COMMITTEE CHAIRTugendhat, a 48-year-old lawmaker and former soldier, has never served in government but heads the influential foreign affairs committee in Parliament. He is seen as a centrist and has billed his candidacy as a clean start. He said he is consulting a “broad coalition” of colleagues to bridge the divides in government.___SUELLA BRAVERMAN, ATTORNEY GENERALBraverman is a lawmaker and barrister who became England’s attorney general in 2020. A euroskeptic and Brexiteer, Braverman, 42, says she wants to deliver “all of the great opportunities of Brexit” — including a tougher line on immigration and leaving the jurisdiction of the European Court of Human Rights. ___KEMI BADENOCH, FORMER EQUALITIES MINISTERBadenoch, a former banker, says she wants to lower taxes and lead a “limited government focused on essentials”.The 42-year-old lawmaker was considered an outsider for the race, but her profile has been boosted by an endorsement from party heavyweight Michael Gove.___REHMAN CHISHTI, FOREIGN OFFICE MINISTERChishti, a former lawyer, is the least known of the contenders. Born in Pakistan, he has an unusual political background, having previously stood as a candidate for the opposition Labour Party in the 2005 general election. The 43-year-old joined the Conservatives in 2007.Recommended___Follow all of AP’s coverage of Prime Minister Boris Johnson and British politics at https://apnews.com/hub/boris-johnson More

Boris Johnson has admitted that his support would damage the chances of any candidate vying to replace him as prime minister. Speaking for the first time since he was forced to announce his resignation, Mr Johnson also brushed aside questions about whether he felt betrayed.At the weekend his sister Rachel Johnson suggested that the loss of the premiership was like a bereavement.During his resignation speech outside Downing Street Mr Johnson himself accused his opponents of succumbing to a “herd mentality”. But asked on an official visit to the Francis Crick Institute in London if he felt a sense of betrayal, Mr Johnson told Sky News: “I don’t want to say any more about all that.”RecommendedHe added that his resignation had happened and there was now a “contest under way”. But in a sign he is aware of just how toxic his reputation has become among Tory MPs, he added: “I wouldn’t want to damage anybody’s chances by offering my support.” “I just have to get on and, in the last few days or weeks of the job, the constitutional function of the prime minister in this situation is to discharge the mandate, to continue to discharge the mandate, and that’s what I’m doing.”Getting involved is “not the job of the prime minister at this stage. The job of the prime minister at this stage is to let the party decide.“But, he added: “I’m sure the outcome will be good.”Mr Johnson was forced to resign after Tory MPs lined up to say they could no longer serve in his government following a series of scandals, including partygate.Mr Johnson narrowly survived a vote of no confidence in his abilities as Conservative leader only last month.But when a former senior civil servant said that he had known of claims against a Tory MP before he appointed him deputy chief whip it proved the final straw for many. Two members of the cabinet, Sajid Javid and Rishi Sunak, resigned in protest, followed by a series of ministers within 24 hours. By Thursday Mr Johnson was forced to accept that his time in Downing Street was over, less than three years after he won an 80 seat majority at a general election. MPs will meet tonight to discuss the timetable to choose his successor. They are expected to whittle down a crowded field of candidates to a final two within the next fortnight. RecommendedThey will then spend the summer attending hustings around the country to allow Tory party members to grill them on their proposals, before a final vote. A new leader is expected to be installed by September. More

Candidates to replace Boris Johnson as Britain’s prime minister are scattering tax-cutting promises to their Conservative Party electorate, as party officials prepare Monday to quickly narrow the crowded field of almost a dozen candidates.Little-known junior minister Rehman Chishti became the 11th candidate to declare he wanted to succeed Johnson, who quit as party leader on Thursday amid a party revolt triggered by months of ethics scandals. Other contenders include Foreign Secretary Liz Truss, Treasury chief Nadhim Zahawi, former health secretaries Sajid Javid and Jeremy Hunt, and backbench lawmakers Tom Tugendhat and Kemi Badenoch.The new leader will be chosen in a two-stage election, in which the 358 Conservative lawmakers reduce the race to two candidates through a series of elimination votes. The final pair will be put to a postal ballot of all party members across the country. Under Britain’s parliamentary system the next party leader will automatically become prime minister without the need for a general election.The party’s 1922 Committee, which runs leadership contests, is set to elect a new executive on Monday, which will lay out rules for the contest. The committee wants to complete the parliamentary stage of the election by the time lawmakers break for the summer on July 21. That would mean a summer second round with a new leader in place by the time the House of Commons returns on Sept. 5.One key decision by the committee will be how many nominations a candidate will need to get onto the first ballot. At the last leadership contest in 2019 it was eight, but the threshold is expected to be 20 or more this time — a move that could eliminate some contenders immediately.RecommendedMany Conservatives are wary of leaving Johnson in office for too long, concerned a lame-duck leader is the last thing the country needs with war raging in Ukraine, food and energy price increases driving inflation to levels not seen in decades, and growing labor unrest. Some also worry Johnson — brought down by scandals over money, rule-breaking and his handling of sexual misconduct allegations against lawmakers — could do mischief even as a caretaker prime minister. In the wide-open leadership contest, contenders are striving to set themselves apart from the perceived front-runner, former Treasury chief Rishi Sunak, who so far has the backing of more than three dozen lawmakers.Many have repudiated tax increases Sunak introduced to shore up U.K. finances battered by the coronavirus pandemic and Brexit — a 1.25% income-tax rise for millions of workers, and an increase in corporation tax next year from 19% to 25%. Most candidates say they will scrap one or both.“I want to cut all taxes,” said Hunt, who pledged to slash corporation tax to 15%. “The Treasury’s own numbers say that you’ll get half the money back that you invest in cutting corporation tax because of increased business activity.”Truss said she would stat cutting taxes “from day one,” and Tugendhat said he would “lower taxes across every aspect of society.”Sunak, whose resignation on Tuesday helped topple Johnson, has cast himself as the candidate of fiscal probity, and warned rivals not to tell the public “comforting fairy-tales” that will make the country worse off in the long run.The internal party battle has already turned fractious, with rivals criticizing Sunak’s record as finance minister, and Zahawi, the current Treasury chief, having to fend off claims he was being investigated over his tax affairs.Zahawi said he was being “smeared” and said he was unaware of any investigation by the tax office or other bodies.“I’m not aware of this. I’ve always declared my taxes — I’ve paid my taxes in the U.K.,” he told Sky News.Oddsmakers say Sunak is likely to be one of the final two contenders, but the race is likely to be highly unpredictable. Both Tugendhat, a former soldier on the party’s center-left, and right-wing rising star Badenoch have secured big-name support and could surprise more experienced rivals.Johnson clung to power for months despite accusations that he was too close to party donors, that he protected supporters from bullying and corruption allegations, and that he misled Parliament about government office parties that broke COVID-19 lockdown rules.He was fined by police for attending one of the parties — the first prime minister ever sanctioned for breaking the law in office — but went on to survive a no-confidence vote last month in Parliament, even though 41% of Conservative lawmakers tried to oust him.But Johnson was brought down by one scandal too many — this one involving his appointment of a politician who had been accused of sexual misconduct.Recommended___Follow all of AP’s coverage of Prime Minister Boris Johnson and British politics at https://apnews.com/hub/boris-johnson More

Tory leadership contender Nadhim Zahawi has sparked a backlash after appearing to suggest he would force government departments to cut runnings costs by 20 per cent in order to fund tax slashing measures.The newly appointed chancellor, who launched his leadership bid over the weekend, later clarified, however, that he was backing an existing policy unveiled by Boris Johnson to cut the size of the civil service by a fifth.Just days into his new role, Mr Zahawi floated reversing his predecessor’s Rishi Sunak’s planned hike in corporation tax, which would raise billions, and reducing income tax if he wins the contest to replace Boris Johnson.He said on Monday he wanted to “bring down the cost of government to give me the headroom to make those changes”, telling Sky News: “Nothing’s off the table”.Pressed on how he would fund tax cuts, Mr Zahawi said that while he was education secretary he engaged in the “tough exercise” of reducing the cost of the department by 20 per cent while delivering manifesto pledges.RecommendedSparking confusion, he told Sky News: “I think it’s only right that across government we do this exercise, it’s an important exercise. It’s only right that we exercise fiscal discipline when it comes to public-sector pay.“Why? Because if we do that, we can bear down on inflation. That in itself brings down inflation.”Asked whether he wanted to reach the 20 per cent goal in every department, Mr Zahawi said: “Well, that’s what I want to make sure we get to; that will give me the headroom to be able to deliver tax cuts which I want to deliver.”Critics seized on his comments, with Labour’s shadow business secretary saying: “The most notable feature of the contest so far is this sort of fantasy economics”. The left-wing campaign group Momentum added: “It’s austerity make two, all to pay for a mass transfer of wealth to the richest”.But after Mr Zahawi’s interview was aired, his campaign team told The Independent the chancellor was referring to an existing controversial policy unveiled by Boris Johnson to reduce the civil service headcount.The outgoing prime minister was warned of strike action after telling his cabinet in May that he wanted to reduce the civil service headcount by a fifth — a reduction of 91,000 staff — to reduce the cost of government.During the interview, Mr Zahawi also pledged to publish his tax returns if he wins the leadership contest after The Independent revealed HMRC experts are investigating his financial affairs.The leadership hopeful claimed to be the victim of a “smear” campaign – but vowed to “answer any questions that HMRC has of me” and publish his accounts annually if he wins the race to be the next prime minister.The cabinet minister sidestepped questions over his personal wealth, however, saying “it’s not right to go into numbers because I will probably get it wrong” when asked just how wealthy he is.Jeremy Hunt, the former Tory cabinet minister, another of the 11 candidates running to succeed Mr Johnson, also stressed on Monday that he hoped to “cut all taxes” and reduce the cost of government.RecommendedAsked about rival Mr Zahawi’s proposals, Mr Hunt said: “It’s always possible to make efficiencies and I think it’s something we should always be looking at.”He added: “But I think the fundamental thing is how do we move ourselves from being an economy that’s becoming one of the higher-taxed economies for businesses, making it more difficult for businesses to get off the ground, to one which people say if you’re going to set up a business, it has to be in Britain.” More

Liz Truss has launched her bid to become Conservative Party leader and prime minister – the 10th to do so – with a promise to cut taxes.The foreign secretary announced her decision to run in the Tory leadership to replace Boris Johnson in an article in The Telegraph.She wrote: “I will fight the election as a Conservative and govern as a Conservative.”The senior Cabinet minister, who is widely expected to be a front-runner in the race to become the next PM, said she would reverse a controversial national insurance hike that had been brought in by her leadership rival, former chancellor Rishi Sunak.She promised to “start cutting taxes from day one” to help with the cost of living crisis that has seen record prices for energy, food, and fuel, amid inflation soaring to 9.1 per cent – its highest rate in 40 years.RecommendedIn addition to Ms Truss and Mr Sunak, the other Tory MPs that have announced their intention to run are former health secretaries Sajid Javid and Jeremy Hunt, chancellor Nadhim Zahawi, transport secretary Grant Shapps, trade minister Penny Mordaunt, former minister Kemi Badenoch and senior backbencher Tom Tugendhat.Ms Truss‘s pledge to scrap the national insurance rise, which came into effect in April, mirrors that of Mr Javid.The levy was introduced by Mr Sunak under Mr Johnson’s government to raise funds for the NHS and social care after the Covid pandemic.But the rise has proved controversial, especially at a time when many households are struggling to make ends meet.In her newspaper article, Ms Truss argued that “it isn’t right to be putting up taxes now” and, that as prime minister, she would take “immediate action” to assist with living costs.In hinting that she would consider making changes to Mr Sunak’s plans to hike corporation tax in April 2023, she said she would “keep [the] tax competitive”.The foreign secretary said she would “get the private sector growing faster than the public sector, with a long-term plan to bring down the size of the state and the tax burden”.She wrote: “Under my leadership, I would start cutting taxes from day one to take immediate action to help people deal with the cost of living.“I would reverse the national insurance increase that came in during April, make sure we keep corporation tax competitive so we can attract business and investment into Britain, and put the Covid debt on a longer-term footing.”Ms Truss said her plan would get the country back on track toward becoming a “high-growth and high-productivity powerhouse”.“It is built on a clear and longstanding Conservative philosophy, including bold supply-side reform,” she added.The MP for South West Norfolk said she would bring “clear and decisive leadership” to Downing Street, adding: “Colleagues know I mean what I say and only make promises I can keep. I can be trusted to deliver.”RecommendedMs Truss said the Tories can win the next election, but acknowledged it will be “an uphill battle”, in what could be a reference to a number of scandals – such as Partygate – under Mr Johnson’s government.Earlier on Sunday, Ms Mordaunt revealed that she will compete to become PM and said – in an apparent jibe toward Mr Johnson – that the UK’s leadership “needs to become a little less about the leader and a lot more about the ship”. More

Former levelling up secretary Michael Gove has backed Kemi Badenoch in the Tory leadership race. He described the ex-minister as “brave, principled, brilliant and kind”, and said she “didn’t flinch” after leading on the government’s response to Tony Sewell’s controversial Commission on Racial and Ethnic disparities report.Mr Gove said: “Kemi doesn’t just win the argument, she delivers – on getting the Whitehall machine to embark on new policies and on levelling up Britain.“Now she has the opportunity to use her first class brain to fix the big problems facing our country.”Writing in The Sun, he added: “As a Tory leader, she would be Sir Keir Starmer’s worst nightmare.Recommended“There is so much we need to fix. From processing passports and driving licences to defence procurement and science investment – we need someone with Kemi’s focus, intellect and no-bulls*** drive.”The former equalities minister has promised “limited government” and “a focus on the essentials”.She supports lower taxes “to boost growth and productivity, accompanied by tight spending discipline”.Writing in The Times, she also hit out at “identity politics” and said Boris Johnson was “a symptom of the problems we face, not the cause of them”.She said governing Britain today requires “a nimble centre-right vision” that “can achieve things despite entrenched opposition from a cultural establishment that will not accept that the world has moved on from Blairism”.PA More