Rishi Sunak gave a strong hint in this week’s spring statement that he will cut taxes on fuel, while warning that the days of higher government spending in the UK – including on defense – are over.
The chancellor said he would help families struggling with the cost of living when he presents updated economic forecasts on Wednesday, saying, “Where we can make a difference, of course we will.”
Sunak admitted that energy prices were “the number one priority” for people right now and that, as MP for the rural constituency of Yorkshire in Richmond, he knew that fuel prices were “a big problem”.
“It’s something that is challenging for families, I understand that,” he told the BBC program on Sunday. He said his policy was to “take targeted action where we think there is the most acute pressure”.
Sunak is under pressure to continue cutting taxes in general, saying they would fall “over time”; he blamed the pandemic on Britain having its highest overall tax burden since the 1950s.
But he declined to say whether he would lower income taxes or change the national insurance payment threshold in the Spring Statement, as many Tory MPs would like.
Sunak made it clear that he would now vigorously resist pressure to increase government spending and borrowing, some of which in recent weeks has come from his Downing Street neighbor Prime Minister Boris Johnson.
In particular, Sunak seemed to rule out an emergency increase in defense spending, arguing that the military budget had already been allocated to another £24 billion, despite Russia’s invasion of Ukraine.
“We’ve done and done this before this happened, and that’s a good thing,” Sunak said, referring to the war in Ukraine.
Sunak insisted that last year’s integrated assessment of the government’s defense and foreign policy acknowledged the Russian threat, though critics argue the document was too preoccupied with an “Asia-Pacific tilt”.
He said his priority was to extract value from the money the government was already spending, particularly in the NHS, and announced an efficiency drive to save £5.5bn, which he said would be put back into public services.
The chancellor said his priority was to cut taxes on the rest of parliament after analysis showed he had raised taxes more in two years than Gordon Brown, former Labor Chancellor, in a decade.
Sunak insisted Brown had not faced a pandemic, but his credibility with Conservative MPs now rests on his ability to control spending and cut taxes before the election.
Shadow Chancellor Rachel Reeves told Sky News’ Sophy Ridge on Sunday: “He keeps saying he’s a low-tax chancellor. He’ll have a chance to prove it on Wednesday.”
The Labor party is calling for a reversal of the £12 billion increase in national insurance, which Sunak says would take place in April to help fund the NHS and clear a treatment backlog. Labor also wants a windfall tax on North Sea oil companies.
But Reeves said Labor would not “get in the way” if Sunak decided in his statement next week to cut the fuel tax by 5 cents per litre.
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