Sunak denies he is 'panicking' with 'Thatcherite' 4p income tax cut

2022-08-01

Rishi Sunak denies he is ‘panicking’ as he pledges ‘Thatcherite’ 4p cut to income tax – but not until the end of the decade – as he prepares to face Liz Truss again TONIGHT and postal voting in leadership race BEGINS

Ex-chancellor has pledged the ‘biggest income tax cut’ since the Thatcher years
Mr Sunak’s campaign has faltered as Liz Truss wins support for low-tax cache
Polls suggest she has a clear lead, with Sunak anxiously trying to close the gap
He had already supported 1p cut off basic rate – but has raised plan to 4p off

Rishi Sunak denied panicking today after offering a delayed 4p cut to income tax if he becomes Prime Minister.

The former chancellor made the offer of a ‘radical but realistic’ cut as he prepared to face Liz Truss in the second Tory leadership hustings tonight, with consensus that he is lagging far behind.

He faces a race against time to catch up with the Foreign Secretary, who is ahead in the polls, as postal voting papers go out this morning.

The former chancellor said he is pledging the ‘biggest income tax cut’ since Margaret Thatcher in the 1980s.

But the move was last night branded a ‘U-turn’ by a Liz Truss campaign source, who said: ‘People need tax cuts in seven weeks not seven years.’

But Mr Sunak again declined to back her plans for immediate tax cuts, which he has ruled out on the grounds they will make soaring inflation even worse.

He told BBC Radio 4’s Today programme that his plan was ‘entirely consistent’ with his campaign and vowing immediate cuts would ‘make the situation far worse and endanger people’s mortgages’.

‘As chancellor I was very keen to make sure that I started cutting taxes and what I’ve announced today builds on that and that’s because I believe in rewarding work and the best way for the Government to signal that is to cut people’s income tax,’ he said.

‘And in this Parliament as Chancellor I already said we’re going to cut income tax for the first time in almost 15 years and as prime minister I want to go further than that and cut income tax at the basic rate by a fifth to 16p, but I want to do that in a way that’s responsible.

‘I want to make sure that we can pay for it, I want to make sure that we can do it alongside growing the economy, so that’s the vision that I have and I think it’s right that people know where I want to take the economy, but it’s entirely different to doing things right now that would make the situation far worse and endanger people’s mortgages which is not something I want to do.’

It came as Ms Truss won the backing of another Cabinet big-hitter. Mr Sunak;’s replacement as Chancellor, Nadhim Zahawi, threw his weight behind her.

Writing in the Times he praised Ms Truss’s ‘booster’ economic approach while implying that his ‘doomster’ predecessor in the Treasury subscribed to the ‘status quo’ and a ‘stale economic orthodoxy’.

Mr Sunak’s bid for the premiership was given a boost by the endorsement of Damian Green, the chair of the One Nation group of Conservative MPs, who said he trusted the former chancellor to ‘unify the party’ and ‘conjure up a solution’ to crises.

The former chancellor made the offer as he prepared to face Liz Truss in the second Tory leadership hustings tonight, with consensus that he is lagging far behind.

He faces a race against time to catch up with the Foreign Secretary, who is ahead in the polls, as postal voting papers go out this morning.

Liz Truss vows to free farmers of red tape

Liz Truss today vows to ‘unleash’ British farming to shore up food security with a pledge to slash red tape and extend a seasonal workers scheme.

Amid warnings that the Government is failing to take feeding the country seriously, the Tory leadership frontrunner promises to make British farmers more competitive.

Miss Truss, a former environment secretary, said she wants to free farmers to grow more sustainable and high-quality British food. Meeting farmers in the South West today, she will say that Brexit has given the UK a ‘once-in-a-lifetime’ opportunity to unleash the sector.

She will pledge to remove onerous EU regulations and red tape which hold farmers back – such as restrictions on the use of drones which can be used for targeted fertilising.

Her government would also review poultry, livestock and dairy, horticulture and animal health regulations to simplify processes and ensure sector resilience and adaptability.

And she would extend the seasonal workers visa scheme – which is due to expire in 2024 – to give farmers certainty that they can continue to use foreign labour.

A source said Miss Truss would work on designing a new scheme with the farming industry.

Mr Sunak’s campaign has faltered over the last few weeks, while Miss Truss has won support for her low-tax credentials and promise to reverse the national insurance hike.

With polls suggesting that she has a clear lead, Mr Sunak is anxiously trying to close the gap before Tory members cast their ballots.

Mr Sunak has already pledged to take 1p off the basic rate of income tax by 2024, but has now promised to go further by the end of the next Parliament by slashing a further 3p. His campaign team estimates that every subsequent penny off income tax will cost around £6 billion a year.

The move – funded from additional tax receipts generated by forecast economic growth – would see the basic rate of income tax fall from 20p in the pound to 16p by December 2029 at the latest.

Mr Sunak said: ‘What I’m putting to people today is a vision to deliver the biggest income tax cut since Margaret Thatcher’s government. It is a radical vision but also a realistic one, and there are some core principles that I’m simply not prepared to compromise on, whatever the prize.

‘Firstly I will never get taxes down in a way that just puts inflation up. Secondly I will never make promises I can’t pay for. And thirdly I will always be honest about the challenges we face.

‘Because winning this leadership contest without levelling with people about what lies ahead would not only be dishonest – it would be an act of self-sabotage that condemns us to defeat at the next general election.’

But a Truss campaign source accused Mr Sunak of offering ‘jam tomorrow’. They said: ‘It’s welcome that Rishi has performed another U-turn on cutting tax, it’s only a shame he didn’t do this as chancellor when he repeatedly raised taxes. The public and Conservative Party members can see through these flip-flops.’

Simon Clarke, chief secretary to the Treasury, added: ‘We cannot afford to wait to help families, they need support now. Liz will cut taxes in seven weeks, not seven years.’

Voting papers will land on doorsteps from today – with many members likely to return their ballots long before the September 2 deadline.

The result will be announced on September 5 and the winner is expected to replace Boris Johnson as prime minister the following day.

Yesterday, Mr Sunak also pledged to introduce £10 fines for patients who fail to show up for NHS appointments. The Tory leadership hopeful said the policy would be in place until the NHS backlogs are reduced to manageable levels.

Patients would be given the benefit of the doubt the first time they miss an appointment. But they would be charged £10 for failing to attend any subsequent appointments without providing sufficient notice.

Allies of Mr Sunak stressed that GPs and hospital trusts would be able to use their own discretion in exceptional circumstances to decide not to issue the fine.

Battle of the tax breaks: How the Tory leadership candidates compare

Rishi Sunak

Income Tax: Would cut by 1p to 19p in 2024 and 4p by the end of the decade

Corporation Tax: Backs planned increase from 19 per cent to 25 per cent next spring

National Insurance: Would keep 1.25 per cent increase

Other tax policy: Would cut VAT this year and ‘reform’ business taxes next year.

Liz Truss

Income Tax: Yet to announce any change to current rates

Corporation Tax: Would scrap planned increase from 19 per cent to 25 per cent next spring

National Insurance: Would reverse 1.25 per cent increase

Other tax policy: Would suspend green levy for 12 months and bring in £2,500 tax break for families looking after young children

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