Rishi Sunak says he wants a ‘lower tax economy’ despite NI hike

Rishi Sunak will declare he wants to create a ‘lower tax economy’ despite hiking National Insurance for millions of workers from April.

In a major speech today, the chancellor is expected to say he is prepared to make ‘difficult and often unpopular arguments’ on spending.

He will also insist future tax cuts need to be done in a ‘responsible way’, following a row with health secretary Sajid Javid over funding for the ‘living with Covid’ plan.

The comments have not been welcomed by Labour, which is accusing Mr Sunak of hypocrisy over tax hikes during the cost of living crisis.

Mr Sunak’s remarks are also unlikely to be popular with the general public which is seeing the day-to-day cost of living rocket, and wages about to be stretched further by imminent tax rises.

Both the chancellor and prime minister have refused to back down on the 1.25% increase to NI coming in April, despite pressure from numerous MPs in their own party.

Delivering a lecture to the Bayes Business School in London, Mr Sunak is expected to say: ‘I firmly believe in lower taxes.

‘The marginal pound our country produces is far better spent by individuals and businesses than government.

‘I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long term challenges,’ he will add.

But in comments that will be seen as a challenge to ministers demanding increased spending, he is expected to say: ‘Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere.’

Mr Sunak will also say that he is ‘disheartened’ when he hears the ‘flippant claim’ that tax cuts always pay for themselves, adding: ‘They do not.’

The speech comes after the cabinet meeting to sign off on the plans for easing coronavirus restrictions was postponed at the last minute.

The delay to Monday’s meeting was understood to centre on Mr Javid’s demands over the maintenance of a testing regime and questions over how other elements would be funded.

Ultimately, ministers approved the plan with no extra cash and funding coming from existing budgets.

Shadow chancellor Rachel Reeves used Mr Sunak’s speech to brand the Conservatives the party of ‘high tax’ as a result of being ‘the party of low growth’.

‘The chancellor may say he “believes” in low taxes in his lecture but the hard facts are that Sunak has hit households and business with 15 tax rises in two years in post, with an unfair National Insurance rise down the line, and he has raised the most tax on average per budget than any chancellor in the last 50 years,’ the Labour MP added.

‘Over a decade of Tory government, the economy has grown far slower than when Labour was in power, and it is set to go even slower in the coming years.’

The UK is in grips of a cost of living crisis with household budgets likely to become even more squeezed in the coming months.

Inflation has hit a near 30 year high and is expected to peak at 7.25% by spring.

Petrol prices are up 25% and gas has risen 30%, while the cost of food shopping has stretched weekly budgets like never before.

From April, some 22 million households will see their energy bills rise by 54% or £693 a year, as Ofgem lifts the energy price cap.

The hike will come at the same time as the NI hike, and weeks after rail ticket increases and fares on Transport for London’s network in a blow to commuters.

Energy and fuel prices may also jump further as a result of the unfolding war in Ukraine and sanctions on Russia which Europe is heavily reliant on for supplies of natural gas and wheat.

Rocketing costs across the board have led campaigners to warn of millions experiencing food insecurity and homelessness.

Get in touch with our news team by emailing us at webnews@metro.co.uk.

For more stories like this, check our news page.