Chancellor Rishi Sunak ‘willing to make unpopular arguments’ on spending

Rishi Sunak will declare his intention to make “difficult and often unpopular arguments” on spending, hinting at a determination to resist any demands for fresh cash from Boris Johnson and Cabinet colleagues.

In a major speech on Thursday, the Chancellor is to insist he wants to create a “lower tax economy” despite hiking National Insurance for millions of workers.

But he will insist that cutting taxation in the future needs to be done in a “responsible way”, following a row with Health Secretary Sajid Javid over funding the “living with Covid” plan.

Labour seized on the speech to accuse Mr Sunak, who is seen as the favourite to succeed Mr Johnson if he is ousted over the partygate scandal, of hypocrisy over tax hikes during the cost of living crisis.

The Chancellor and the Prime Minister have been refusing to back down on the 1.25 percentage point hike to National Insurance for April despite pressure from numerous Tory MPs.

Delivering a lecture to the Bayes Business School in London, Mr Sunak is expected to say: “I firmly believe in lower taxes.

“The marginal pound our country produces is far better spent by individuals and businesses than government.

“I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long term challenges,” he is due to add.

But in comments that will be seen as a challenge to ministers demanding increased spending, he is expected to say: “Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere.”

He will also say that he is “disheartened” when he hears the “flippant claim” that tax cuts always pay for themselves, adding: “They do not.”

The speech comes in a week during which the Cabinet meeting scheduled to sign off on the plans for easing coronavirus restriction was postponed at the last minute.

The delay on Monday was understood to centre on Mr Javid’s demands over the maintenance of a testing regime and questions over how elements would be funded.

Ultimately, ministers belatedly approved the plan with no extra cash and funding coming from existing budgets.

Shadow chancellor Rachel Reeves used the speech to brand the Conservatives the party of “high tax” as a result of being “the party of low growth”.

“The Chancellor may say he ‘believes’ in low taxes in his lecture but the hard facts are that Sunak has hit households and business with 15 tax rises in two years in post, with an unfair National Insurance rise down the line, and he has raised the most tax on average per budget than any Chancellor in the last 50 years,” the Labour MP added.

“Over a decade of Tory government, the economy has grown far slower than when Labour was in power, and it is set to go even slower in the coming years.”