RISHI:MY MISSION TO SLASH YOUR TAX

Strongest hint yet he could cut fuel duty and income tax later this week

RISHI SUNAK is planning a Government blitz on the soaring cost of living as he declares it his mission to cut taxes for hardpressed households.

The Chancellor, who will deliver his Spring Statement to the Commons on Wednesday, reveals in an exclusive interview in today’s Mail on Sunday that he is drawing up a package of measures to soften the impact of spiralling bills.

Although the plans are still being finalised, it is understood that cuts to fuel duty and income tax are among the measures being considered. In addition, the Chancellor has asked Treasury officials to establish a new cost-of-living unit which would scrutinise all new policies for their impact on household finances. He will also chair a new Cabinet committee on financial waste which will aim to prune nearly £6billion from public spending.

In his interview, Mr Sunak says that

his number one priority is tackling the rising cost of living. ‘I want people to be reassured that I am on their side, I have got their back and I’ll stand with them,’ he says. ‘My priority over the rest of this Parliament is to cut people’s taxes. That is my mission.’

And in what will be seen as a warning to Government colleagues demanding more spending, the Chancellor says: ‘Let’s not be spending any more money – let’s make sure the money we’re spending is spent really well. That’s got to be the focus, because otherwise it’s hard to cut taxes.’

An income tax cut for English workers would increase pressure on Finance Secretary Kate Forbes to deliver a similar boost to Scots. The Scottish Government sets its own income tax rate and bands, and everyone earning more than £27,850 currently pays more than they would south of the Border. Some powers over

‘Let’s not spend more – let’s spend better’

income tax are reserved to Westminster, whilst others are devolved to Holyrood.

If the Chancellor cuts income tax by raising the Personal Allowance – the £12,570 earned before any tax is taken – it would automatically apply in Scotland. However, any alteration in tax rates or tax bands in England and Wales would not directly apply.

Mr Sunak’s remarks come amid growing calls to cancel a rise in National Insurance of 1.25 percentage points aimed at targeting the NHS backlog and social-care reforms, which will be deducted from pay packets starting next month.

Also writing in today’s Mail on Sunday, Labour’s Shadow Chancellor, Rachel Reeves, says Mr Sunak should ‘grasp the seriousness of the situation’ and reverse ‘an unfair tax hike on working people’.

Although both Mr Sunak and Boris Johnson have insisted that the National Insurance rise will not be cancelled, it is likely to be mitigated by other measures.

Rocketing energy bills and petrol prices, exacerbated by the conflict in Ukraine, have contributed to surging inflation, which combines with rising interest rates to create the most severe squeeze on household finances since the 1970s. Tory strategists fear the crunch will lead to poor results in May’s local elections.

Mr Sunak warned that Wednesday’s statement was likely to include ‘challenging’ projections for inflation and GDP from the Office For Budget Responsibility, especially in the wake of the Russian invasion of Ukraine.

The Chancellor said: ‘The steps we have taken to sanction Russia are not going to be costfree. We were already building up some challenges around inflation. Those have only been exacerbated by the actions that lots of countries have taken to send a very strong signal to Putin about his aggression in Ukraine and you will see that reflected in the numbers.

‘I am never going to shirk away from my responsibility to make what are difficult but ultimately, I think, the right decisions to ensure that this country has economic security both today and into the future, so that we have the resilience to respond to shocks like this.

‘And I’ve made those decisions so that we are, quite frankly, in a good position now when you look at how many people are in work, how businesses are growing, and how the public finances are improving.’

The planned cost-of-living unit would scrutinise any new policy or additional spending requests ‘through the prism of the cost of living’. A Treasury source said: ‘Everything this Government does should have a laser-like focus on reducing the cost of living and this unit should help with that.’

The Chancellor’s new Efficiency and Value for Money Committee is expected to cut £5.5 billion worth of waste, with savings channelled back into public services.

IN OUR exclusive interview today, Rishi Sunak indicates that tax cuts are very likely in his Spring Statement on Wednesday. Everyone sensible will welcome this. Sometimes the most basic things need restating, but during the pandemic, governments all over the world largely shelved many of the sensible rules of economics.

Of course, that was necessary then, to save jobs and keep businesses alive, and to pay for the counter-offensive against Covid itself.

But now the old rules apply again. And they go like this: people are almost always better than governments at spending their hard-earned incomes.

If citizens are allowed to hang on to more of the money they have worked for, they will spend and invest it in ways which benefit the whole country. Seldom has this point been more important.

The small service industries and businesses, which have taken over from the big manufacturers in our economy, badly need us to spend our cash over their counters. Everything from coffee shops to travel firms to the high street has been starved of cash for almost two years.

Reliance on online goods and services, fostered during the Covid crisis, has damaged local shops, theatres and cinemas.

So Mr Sunak will be helping himself, as well as the rest of us, if he ensures that we all have more to spend in such places. If business flourishes, the tax base expands. And that is how we will afford the things government alone can do, such as the repair of the NHS and the rebuilding of our defences in this new world of war and danger.

It is only dogmatic socialists who think tax is good in itself. A Tory Chancellor has to remember that the best governments leave people alone as much as possible. We can only hope that Mr Sunak’s cuts will be generous, and the first of many.