No ‘headroom’ to talk tax cuts, Treasury minister tells Tory MPs
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Tory MPs clamouring for tax cuts have been told there is not the “headroom” in the public finances to consider them as the Government struggles to control inflation.
Financial Secretary to the Treasury Victoria Atkins said on Sunday the priority is getting down high prices but insisted ministers want to look at taxes “as soon as we can”.
The comments will further alarm Conservatives who have been pressing for a pre-election giveaway to help drive economic growth and win over voters.
Chancellor Jeremy Hunt, who is set to give an economic speech at the City of London’s Mansion House on Monday, has warned he must “double down” on inflation.
He said that “we will not countenance tax cuts if they make the battle against inflation harder” as ministers try to fulfil the pledge of halving the figure to around 5%.
On Sunday, Ms Atkins spelled out that the Government does not believe it has the finances to consider reducing taxes.
She told the BBC’s Sunday With Laura Kuenssberg programme: “We are Conservatives, we absolutely fundamentally believe in lower taxes.
“We want to be fiscally responsible, both the Prime Minister and the Chancellor have said that as soon as we can we will cut taxes.
“We are having to tackle inflation, that has to be our priority. We do not have the headroom at the moment to look at tax cuts but as soon as we can, as soon as we have taken the measures that we are taking to reduce inflation, then we are able to start having those conversations.”
Prime Minister Rishi Sunak has set halving inflation to about 5% by the end of the year as one of his five priorities for the nation but the rate has stubbornly remained at 8.7%.
In an interview with the Financial Times, Mr Hunt had said achieving that promise was “going to be more challenging than we thought”.
“We will not countenance tax cuts if they make the battle against inflation harder,” he said.
“If we were to pump billions of pounds of additional demand into the economy when inflation is already too high, that would mean fiscal policy working against monetary policy.”
With the Conservatives trailing Labour in the polls, some Tories have been urging the Prime Minister to cut taxes before the next election. But time is running out with one due before the end of January 2025.
