Published On: Tue, Nov 21st, 2023
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Rishi Sunak will have to put his money where his mouth is in tax cuts | Politics | News

Rishi Sunak has spent the last year making a virtue of defying Tory calls for tax cuts by styling himself as an ever-vigilant inflation hawk.

This stand-off has been gruelling for those Tories. They have had to grit their teeth while the tax burden hits its highest in 70 years – something you would expect from traditionally high-taxing and high-spending socialists.

On top of this, they risk going into the next election having presided over the biggest tax rise since World War Two, with taxes set to hit 37 percent of national income. 

But now, the Prime Minister is encouraging expectations that the Autumn Statement will start to deliver some of their long-anticipated tax cuts.

What has driven his change of tack?

Officially, Sunak and his Chancellor Jeremy Hunt are busy framing this as the natural consequence of falling inflation, seeking to bill it as the deserved reward for fiscal prudence.

However, under the radar, they will have felt forced to act given the growing Tory jitters amid the dire state of the polls.

Despite everything the Prime Minister has done so far, from negotiating the Windsor Framework to bringing David Cameron back into Cabinet, the Tories continue to trail Labour by an average of 20 points.

Some polls estimate they are as much as 30 points behind, which would be apocalyptic if replicated at a general election – with even Sunak’s seat lost.

The Prime Minister and his allies have tried valiantly to allay Tory nerves by insisting that such dire polling should not suggest the country is falling in love with Sir Keir Starmer. That may be so, but it does not make the party look any better to still be trailing behind a supposed busted flush.

To me, the most useful polling is the work digging into what people feel each party has to offer. For the Tories, the latest research by Redfield & Wilton Strategies will have been sobering reading – as it set out how people had more faith in Labour on every single one of the major issues.

Sunak would struggle to find consolation in research about how the public felt specifically about the big economic questions. A variety of surveys have shown over the last few months that people trust Labour more than the Tories to cut taxes.

That is understandable given the almighty implosion the party had last year over Liz Truss’s attempt to cut too many taxes too fast. The resulting hike in corporation tax, alongside the other tax rises Sunak has waved through, have gifted Labour the easy attack line of “25 Tory tax rises”.

When the cost of living remains a massive concern, there can be no clearer way to help than to leave people more of their own money by cutting taxes.

That is why Sunak’s embrace of tax cuts will relieve many Tories by showing he understands their desire to feel the benefits of fiscal prudence.

It won’t be long until we see what rewards the Prime Minister has to offer. He has spoken of cutting taxes “to reward work”, which suggests the likes of National Insurance and income tax could be in the Chancellor’s sights.

Once the Autumn Statement’s tax cuts are clear, Tory appetite for more will only grow.

The Treasury will inevitably insist on keeping some measures back in order to ensure the Chancellor can keep up the momentum next year. But too little, too late risks dooming the Tories to electoral defeat.

Now Sunak is promising to cut taxes, he will be expected to put his money where his mouth is. That means giving the Tories clear measures they can sell on the doorstep to show they are making millions better off up and down the country. It means sketching out a plan for how much better off they would be if he remained in office.

Unless the Prime Minister can convince people that the Tories are the party of tax cuts, he is destined to continue struggling to turn things around in the polls.

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