Chancellor Jeremy Hunt has argued that sizeable tax cuts this year would “compromise” the battle against inflation as colleagues piled on the pressure for a pre-election giveaway.
The Cabinet minister said on Monday he and Rishi Sunak were prioritising the pledge to halve prices before carrying out tax cuts in any “substantial way”.
As Tory members descend on Manchester for their annual conference, Mr Hunt insisted the Prime Minister will survive in the role for his second in charge despite electoral prospects looking bleak.
Cabinet minister Michael Gove has publicly called for pre-electoral tax cuts, a cry ousted leader Liz Truss will also make.
Mr Gove also backed Business Secretary Kemi Badenoch calling for the UK to keep the threat to leave the European Convention on Human Rights (ECHR) “on the table” in a suggestion popular with the Tory right.
Some observers believe there is an unofficial “beauty pageant” going on just in case there is a chance to run for the leadership in the event of Tory failure at the next election.
Mr Hunt, however, told GB News: “The way you win elections is by making promises people believe. We’re being honest with people, there is no short cut to tax cuts.
“If I gave a big tax cut this year, it would be inflationary, because we’d be putting money in people’s pockets, which would boost up demand, which would ultimately mean prices would go up as well. So this is not the right time.”
He ruled out cuts to inheritance tax, or the levies on work Mr Gove said he favoured.
The Chancellor said: “I don’t think it’s going to be possible to do any big tax cuts, on the basis first of all of the public finances as we see them… but also it would compromise our battle against inflation.
“No tax cuts are possible in a substantial tax way at the moment, so it’s not just inheritance tax, it’s income tax, it’s all the different tax cuts that people look at. If we start having big tax cuts it would be inflationary.”
Asked if he believes it will be Mr Sunak’s first and last conference as Tory leader, Mr Hunt said “no, I don’t” before praising his “formidable” talents, hard-working nature and ability to “cut through really difficult problems”.
The Chancellor insisted to Times Radio he has been “completely cured” of any ambitions to enter No 10 himself.
Mr Hunt will use his conference speech to announce tougher rules on benefits and a boost to the national living wage as part of a Tory plan to get more people into work.
He will promise the national living wage will increase to at least £11 an hour from April.
But alongside that he will look again at the benefit sanctions regime to make it harder for people to claim welfare while refusing to take “active steps” to move into work, with proposals due to be set out in November’s Autumn Statement.
With Mr Hunt insisting that tax cuts in the Autumn Statement are unlikely, the Tories would have the option of a giveaway at a possible full Budget in the spring before any election in 2024.
In other developments at the Manchester conference:
– Education Secretary Gillian Keegan will set out plans to ban mobile phones from classrooms in England, with a source telling the Daily Mail she believes the devices “pose a serious challenge in terms of distraction, disruptive behaviour and bullying”.
– Former prime minister Ms Truss will call for tax cuts, fracking and measures to boost housebuilding in a bid to put pressure on Rishi Sunak from the Tory right.
– Ms Badenoch, seen as a potential successor to Mr Sunak, will use her conference speech to stress her Brexiteer credentials and accuse critics of seeking to talk down the UK.
The Conservatives said the move will benefit two million people and follows the target for the national living wage to reach two-thirds of median hourly pay by October next year.
The Low Pay Commission estimates the rate required to meet that goal should be between £10.90 and £11.43, with a central estimate of £11.16.
The increase will mean the national living wage will increase by more than £1,000 for a full-time worker next year.
Mr Hunt and Work and Pensions Secretary Mel Stride are expected to use November’s Autumn Statement to set out tough welfare reforms.
“I am incredibly proud to live in a country where, as Churchill said, there’s a ladder everyone can climb but also a safety net below which no-one falls,” Mr Hunt will say.
“But paying for that safety net is a social contract that depends on fairness to those in work alongside compassion to those who are not.
“As part of that we will look at the way the sanctions regime works. It is a fundamental matter of fairness.
“Those who won’t even look for work do not deserve the same benefits as people trying hard to do the right thing.”
On the conference fringe, Ms Truss will address a rally with a focus on boosting growth – a key theme of her short-lived premiership a year ago.
“There is no reason we cannot go into the next election with a platform that is proudly Conservative,” she will say. “Let’s stop taxing and banning things, and start producing and building things.”
Sam Blewett, David Hughes and Dominic McGrath – Press Association