Let’s cut taxes for those who need it most

I ENTERED this leadership contest to tell the British people the truth. I won’t take part in a bidding war on whose tax cuts are the biggest, because we need to first set out the reality.

Before we can make tax cuts, we need to make sure we have a plan for a state focused on the priorities of ordinary people, not Twitter.

I have a longer-term plan that includes serious government reform. But I know that people are suffering now. And they need help.

For that reason, if I become Prime Minister I will call an emergency Budget. Those working hard on low and average incomes, and pensioners on fixed incomes being hit hard by inflation, must be our priority. Any tax cuts will therefore be broad, fair and focused on these groups.

Firstly, I will reduce fuel duty to cut the spiralling costs of everyday people’s transport. It is a disgrace that most people are seeing the cost of just getting to work rise beyond control.

Secondly, we will bring forward the universal credit and pension credit uplift to compensate for the rise in prices from April to September. While waiting for inflation uprating was fine when inflation was 2 per cent, it is not acceptable at 10 per cent.

This will not cost any more in the longer run as it just moves the timing from April 2023 to autumn 2022, but it shows we understand people’s problems and that they are not just numbers on a spreadsheet.

I will also stop the planned corporation tax rise. The planned rise will only raise costs further for consumers, suppress wages, and slow growth.

Finally, we will raise the income tax threshold. I cannot promise how far we will go, but this is a good way to get money to those who need it. Any increase will be to the £12,570 threshold, so we are not talking about wealthy households.

All too often, we forget about those who do the right thing, who work hard and save on moderate incomes. I will never, ever forget them. Much of the Conservative leadership race so far has been defined by who can promise the biggest tax cuts, or argue that we can afford no tax cuts at all. Having worked as Exchequer Secretary in the Treasury, I can tell you that the Treasury orthodoxy which implies every £1 of tax cut will cost the Treasury roughly £1 is wrong.

BUT that does not mean that the opposite view, that all tax cuts pay for themselves, is correct either.

Both of these positions rest at either extreme of the Laffer curve, when we know that the truth really lies in the middle. As a party we must do better.

Because we have already committed to people that they will receive support this October, I will maintain the fuel support rebates that have been pledged. But if elected leader I am clear that this must be a one-off payment and cannot become an annual cheque from the Government to every household – rich or poor.

The approach for getting us through the cost of living crisis this winter must be focused, it must not be inflationary and must support productivity. But let me be clear, while any government I lead will be laser-focused on the current cost of living crisis, we can only deliver long-term prosperity and lower taxes if we deliver a smaller and focused state, alongside a wider pro-growth agenda.