Boris Johnson’s allusions to the Treasury’s understated tax cuts | Cost of living crisis
The Treasury has been forced to curb speculation over an impending cost of living announcement for a second day in a row, after Boris Johnson hinted to Tory MPs that the government was set to cut taxes.
MPs said the Prime Minister waved at the idea of tax cuts to help struggling households, including at a garden party in Downing Street for backbench MPs.
Northern Research Group chairman Jake Berry told Sky News the Prime Minister was “showing more than a little peg” to colleagues on tax cuts.
A Treasury source played down the idea, however, suggesting that in his conversations with MPs Johnson had simply ‘echoed the Chancellor’s ambition to cut taxes for the people’, which Rishi Sunak laid out during his spring statement.
It followed Johnson’s suggestion in the House of Commons on Tuesday that he and Sunak would say more about the cost of living “in the coming days”, leading to speculation of an imminent statement from the Treasury.
A former minister said Johnson’s comments to colleagues did not appear fully formed or coordinated with the Treasury, and said it added weight to the prospect that Sunak could be moved in a reshuffle this summer.
It is understood that the Chancellor is privately considering options for measures which could be announced before the summer holidays, when it becomes clearer to what extent energy regulator Ofgem will allow bills to rise in October – although it is unclear whether these will be substantial enough to satisfy the PM.
Johnson will hold a cabinet meeting in Staffordshire on Thursday to try to underline his government’s mission to level the UK.
Asked about the cost of living during a visit to Finland on Wednesday, he said: “We will have the maximum energy, effort and ingenuity to help the British people. You know the money we spend Of course, there will be more support in the coming months as things continue to get tough with rising energy prices.
A person with knowledge of Treasury thinking said: ‘The possibility of doing something sooner rather than later is on the rise.’ They suggested that a temporary VAT cut was unlikely, as it would push up inflation every time it reversed.
Instead, options could include directly compensating users for increased energy bills – particularly if the increase is not as severe as feared before recent wholesale price declines. gas – or the extension of the council tax refund that many households received in April.
Meanwhile, ministers have been asked to propose deregulatory measures that could reduce costs for consumers without forcing Sunak to approve more spending, the first of which is due to be announced in days.
Some MPs would like Sunak’s promised income tax cut for 2024 to be brought forward; but with 80% of the benefit going to the top half of income, that would do little to reduce poverty.
Calls from MPs across the Conservative Party for the government to take a more generous approach have intensified since last week’s disappointing local election results.
“The pressure on Rishi is huge right now,” said former work and pensions secretary Iain Duncan Smith, who called for Universal Credit to be increased to help the lowest paid.
He said the Bank of England’s decision to raise interest rates last week meant the Treasury needed to loosen the purse strings to prevent the economy from sliding into recession.
“You have to keep growing,” he said. “You need to loosen fiscal policy: the Treasury got it completely wrong.”
Carlisle MP John Stevenson said he expected the government to do more, especially for the poorest.
“Aid must be realistic, therefore targeted at the most deprived,” he said. “Universal credit is possible, another look at housing tax or energy taxes are sensible options.”
Wycombe MP Steve Baker called for policy changes, including tax cuts and deregulation, to kick-start growth.
“In the short term, I’m always going to worry that too many voters won’t be able to eat or heat their homes: that’s why I wanted to keep the £20 universal credit increase,” he said. declared.
“But in the long term, it is very clear that the welfare state will not meet long-standing spending promises. This is why the PM must aim for growth.
Michael Gove came under fire on Wednesday for putting on a series of overtones when asked about speculation of a split between Johnson and Sunak.
He said on TV: ‘This is an example of some commentators running after themselves and trying to take a common sense statement, turning it into ‘big news’ in all caps.
“When the Treasury rightly says ‘calm down,’ people instead of acknowledging that they exaggerated the story in the first place say, ‘Oh, that’s clearly a split’.”
Responding to Gove’s interview, in which at one point he appeared to be impersonating a Liverpudlian character played by comedian Harry Enfield, Angela Rayner, the Labor Party’s deputy leader, said: ‘The cost of living crisis n is it a joke for them? It is not a serious government.