Rishi Sunak defied Tory calls for tax cuts in the Budget today suggesting only idiots think the burden can fall quickly after Covid and the Ukraine war.
The PM gave a blunt response when he was quizzed on the potential for reductions soon – and also swiped at James Dyson after the billionaire launched a brutal attack on the government’s ‘short-sighted’ and ‘stupid’ policies.
Asked on a visit to Morecambe whether he will cut taxes, Mr Sunak said: ‘I’m a Conservative, I want to cut your taxes … I wish I could do that tomorrow, quite frankly, but the reason we can’t is because of all the reasons you know.
‘You’re not idiots, you know what’s happened.’
He said the pandemic and the war in Ukraine had left the public finances ‘not where it needs to be’.
Mr Sunak said ‘it takes a bit of work to get there’ but he vowed to make the economy stronger so the NHS and schools can be funded, secure lower interest rates and get a ‘grip of’ inflation.
‘Trust me, that’s what I’m going to do for you this year, that’s what we’re going to do while I’m Prime Minister and if we do those things we will be able to cut your taxes,’ he added.
Mr Sunak also pointed to the ‘super-deduction’ – which allows companies to invest large sums tax-free – saying he would like to hear from Sir James whether any other country was offering anything similar.
Mr Sunak and Chancellor Jeremy Hunt have been scrambling to bring in revenue since the Downing Street handover last October, insisting their priority is to stabilise the government finances in the wake of the disastrous Liz Truss meltdown.
However, there is disquiet on Conservative benches there seems to be no prospect of tax cuts at the Budget in March.
MailOnline understands there is instead a Cabinet push for Mr Hunt to ease the eye-watering burden on Brits by the Autumn, with fears it could be the only ‘narrow path’ to the Tories winning the next election.
Rishi Sunak gave a blunt response when he was quizzed on the potential for reductions soon
Billionaire James Dyson (left) today launched a brutal attack on ‘short-sighted’ and ‘stupid’ red tape and high taxes in the UK. The comments come amid rising pressure from ministers and Conservative MPs for Rishi Sunak and Jeremy Hunt (right) to bring in tax cuts
The tax burden has risen sharply in recent years, causing alarm among Tories
Renowned tycoon and inventor Sir James said Britain was stuck in a state of ‘Covid inertia’ that was holding the economy back.
Sir James, who backed Brexit and has an estimated net worth of £23billion, accused the Tory government of ‘interfering’ and ‘penalising the private sector’.
He also complained that the failure to get workers back to the office after the pandemic has ‘badly damaged the country’s self-belief and work ethic’.
Writing in The Daily Telegraph, Sir James called on Mr Hunt to use the spring budget to ‘incentivise private innovation and demonstrate its ambition for growth’.
‘The Government seems intent on moving in the opposite direction with the introduction of suffocating regulation, greater interference with business, and thinking it can impose tax upon tax on companies in the belief that penalising the private sector is a free win at the ballot box.’
Sir James warned: ‘This is as short-sighted as it is stupid. In the global economy, companies will simply choose to transfer jobs and invest elsewhere.
‘Our country has an illustrious history of enterprise and innovation, born of a culture which we are in the process of extinguishing.’
The negative assessment came despite glimmers of hope that inflation could be easing.
Figures yesterday showed the headline CPI finally nudging down from 40-year highs, with the rate 10.5 per cent in the year to December.
GDP data has also been holding up marginally better than analysts had expected, with the UK potentially avoiding a technical recession in the last quarter of 2022.
Tories believe the government should have a bit more room for manoeuvre after energy costs dropped, reducing the liabilities for the household bill subsidies.
One senior minister told MailOnline that Rishi Sunak and Mr Hunt would take the decision, but a likely election in the second half of next year should focus minds. Tax cuts could help boost Rishi Sunak’s position and morale in the crunch final year of the parliament.
The minister said there were ‘some grounds for hope with the economic data looking slightly better’.
Inflation dropped slightly in December after spiralling to a 40-year high in October
GDP data has also been holding up marginally better than analysts had expected, potentially avoiding a technical recession in the last quarter of 2022
‘Bills are starting to ease, inflation might be coming down,’ they said.
‘If we can make some savings on things like the energy bills scheme, if the economy is stronger because we’ve stabilised the government, we might be able to return to the issue of tax cuts soon.’
They added: ‘It’s a narrow path. We need a better economy, persuade people to trust us with the NHS. We might need to get lucky with Ukraine, and hope Starmer makes mistakes.
‘But it is all about momentum. If we go into 2024 putting some money back into people’s pockets then it will be all to play for.’
A Treasury source insisted that tackling inflation was the ‘priority’ for Mr Hunt.
‘We want low taxes and sound money. But sound money has to come first because inflation eats away at the pound in people’s pockets even more insidiously than taxes,’ they said.
However, they acknowledged that the Bank of England is anticipating the PM’s goal of halving inflation could be reached by the final quarter of the year.