Rishi Sunak promises to cut taxes ‘over time’ as autumn statement looms – business live | Business
Sunak: Over time, we can and we will cut taxes
UK prime minister Rishi Sunak has declared he believes in cutting taxes “carefully and sustainably”, in a speech on the UK economy.
Speaking ahead of Wednesday’s autumn statement, Sunak claimed his government’s approach was “one that gets inflation down and keeps it down”.
Sunak says:
“One that believes the private sector grows the economy and, where government has a role, it must be limited.
“One that believes in cutting taxes, but doing so carefully and sustainably.
“And one that is ambitious about the unprecedented opportunities for this country from the new wave of technology.”
Sunak then hailed last week’s drop in inflation to 4.6%, saying he has hit his pledge of halving inflation this year, so it is now time to “look forward towards the future economy that we want to build”.
However, the UK’s actual inflation target, which the Bank of England is charged with setting is actually 2%.
Nevertheless, Sunak argues that the government could now look at cutting taxes “over time” – possibly a hint that they could come next year, rather than this week?
He says:
“We will do this in a serious, responsible way, based on fiscal rules to deliver sound money, and alongside the independent forecasts of the Office of Budget Responsibility.
“And we can’t do everything all at once. It will take discipline and we need to prioritise.
“But over time, we can and we will cut taxes.”
Sunak: “now that inflation is halved & growth is stronger, meaning revenues are higher we can begin the next phases & turn our attention to cutting tax. We will do this in a serious & responsible way”
” Over time we can & we will cut taxes”Over time = income tax cuts in 2024?
— Ben Quinn (@BenQuinn75) November 20, 2023
Key events
Labour’s Reynolds: Failure to grow economy makes tax cuts harder
Richard Partington
Labour’s shadow business secretary has told corporate bosses that Rishi Sunak’s failure to grow the UK economy has made cutting taxes and increasing government spending harder to justify.
Speaking at the CBI’s “general election countdown” conference in Westminster, Jonathan Reynolds said an incoming Labour government would focus on growing the economy to help finance its spending plans, my colleague Richard Partington reports.
Reynolds was speaking after Sunak used his speech in north London this morning to argue the time was coming for tax cuts, ahead of chancellor Jeremy Hunt’s autumn statement on Wednesday.
Reynolds dodged questions at the CBI conference about whether now was the right time for tax cuts, or if Labour would be comfortable with maintaining the highest tax levels as a share of the economy in 70 years to finance its spending plans.
However, he said an incoming Labour government would focus on growing the economy.
Reynolds said:
“The focus of the government has changed. The focus we’ve got is the right set of priorities for the future of the country,” he said.
“Unless we get the economy growing more strongly than it has done since the Conservatives came to power, all of these questions about tax cuts, more spending, public services, they all get harder. And that’s why our absolute focus is on which measures will make the economy grow faster, will attract more private business investment.”
Asked about a comment Sunak made on Monday that Labour lacked political courage to cut the UK’s national debt, Reynolds quipped, “lectures in political courage from the prime minister?,” drawing laughter and applause from the crowd of business leaders.
He added:
“If you want to compare the evidence base of previous Labour governments, or the future plans we have, or what the Conservative party has delivered over the past 13 years, I think the evidence base is pretty stark.
“There has to be a level of self-awareness from the government and the statements they can make.”
Back in the turbulent world of artificial intelligence, OpenAI’s chief scientist Ilya Sutskever has said he “deeply regrets” his involvement in the shock dismissal of Sam Altman last Friday.
Sutskever has posted that he never intended to harm OpenAI, and will try to reunite the company.
I deeply regret my participation in the board’s actions. I never intended to harm OpenAI. I love everything we’ve built together and I will do everything I can to reunite the company.
— Ilya Sutskever (@ilyasut) November 20, 2023
The comments come hours after the organisation appointed Emmett Shear as interim CEO…. and Altman dramatically joined major OpenAI investor Microsoft.
Labour’s shadow chancellor of the Duchy of Lancaster and national campaign co-ordinator, Pat McFadden, has criticised Rishi Sunak for unveiling five new long-term promises today.
McFadden says:
“The Tories have failed to deliver on so many pledges from the past. Why should people believe they will deliver on pledges for the future?
“It sums up this Conservative Party to claim things will be better tomorrow when they can’t even fix the problems of today.
“After 13 years of Conservative governments, working people have been left worse off and the Conservative economic record lies in tatters. Only Labour can get our economy growing and deliver change for working people.”
In the foreign exchange markets, the pound touched its highest level against the US dollar in two months this morning.
Sterling rose $1.251 briefly around 10am, for the first time since 13 September.
The rally came as the dollar hit a two-month low against a basket of currencies, as traders continue to bet on US interest rates being cut in 2024.
Markets have priced out the risk of further rate increases from the Federal Reserve after US inflation fell to 3.2% in October, amid several weak economic data releases last week.
Here’s The Times’ Steven Swinford on Sunak’s speech:
Interesting approach:
Rishi Sunak suggests Labour would be as economically reckless as Liz Truss and her mini-budget
‘Blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts’
— Steven Swinford (@Steven_Swinford) November 20, 2023
The Night Time Industries Association has warned that one in five night time economy businesses, such as bars, nightclubs and live music venues, face collapse in January unless “substantial tax reductions” are announced in the autumn statement.
A poll of NTIA members found that:
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20% of Businesses polled are facing potential closure in January without government support
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72% of Businesses are either barely breaking even or losing money
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95% of Businesses polled requested VAT cuts for the sector
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78% of Businesses polled requested an extension of business rates relief
Michael Kill, CEO of the NTIA, warns:
“Without swift and decisive action from the government, we are on the precipice of witnessing the collapse of the night time economy and creative industries. The extension of business rates relief and a VAT cut are not only necessary for immediate survival but are crucial for the survival of businesses, but also in laying the foundation for future growth and job creation.”
“The Night Time Industries Association remains committed to working collaboratively with the government to develop and implement effective policies that will safeguard the future of these vital industries. The time to act is now, and NTIA urges policymakers to prioritize the hospitality, night time economy and creative industries in the Autumn budget this week”.
Rishi Sunak also spoke of the need to focus on the ‘supply side’ of the economy, which may be a hint that business tax cuts will be prioritised.
He said:
We want to support businesses to invest, innovate, and grow through lower taxes and simpler regulation.
Where we provide support, it should be targeted and strategic.
Sunak says he will now cut taxes: “We will do that carefully, we will do that responsibly, but that time is now here… Our priority has always been the supply side of our economy”. That suggests biz tax first – imperative it is the right ones and focus on pre-profit costs https://t.co/peuL4scD8H
— Kate Nicholls OBE (@UKHospKate) November 20, 2023
Business groups have been pushing for the current temporary “full expensing regime”, which lets firms offset investment spending against their tax bill, to be made permanent.
Some City economists believe Jeremy Hunt will announce tax cuts in Wednesday’s autumn statement.
Goldman Sachs have estimated that Hunt now has approximately £25bn of headroom which he can spend and still keep within the government’s fiscal mandate, thanks to a pick-up in tax receipts.
In a note to clients, Goldman predict the chancellor will make “modest tax reductions” costing up to £10bn, keeping some firepower back for the budget next March.
They say:
Measures that the government could consider include a reduction in inheritance tax, an extension of the full expensing capital allowances regime, or a cut in stamp duty
That said, we think that larger tax cuts are less likely at next week’s statement, because a more substantial fiscal loosening would risk raising inflation and interest rates. Instead, we expect the government to conserve the majority of its headroom for the Spring Budget.
Rishi Sunak also claimmed that the UK welfare system is not currently “sustainable”.
He was asked whether the government is planning a squeeze on welfare payments in the autumn statement.
The PM declined to “pre-empt” any announcements on Wednesday, but argued the current situation isn’t “good”.
He said:
“Our view on the welfare system is that it should be compassionate, it should be fair and it should be sustainable…
“With over 2 million people of working age who are not currently working, that isn’t a good situation.
“It’s not sustainable for the country, for taxpayers. It’s not fair. But it’s also not compassionate to write people off.
“And over a decade we’ve seen the percentage of people who are essentially deemed not to be able to do any work has tripled. That doesn’t seem like a system that’s working properly. And that’s why we will look to make sure that the system is reformed and supports those who can work to do so.”
It emerged last Thursday that welfare claimants who “refuse” to engage with their jobcentre or take work offered to them may lose benefits.
And as flagged earlier (see 10.29am post), there are concerns that benefits may be raised by October’s lower inflation reading (4.6%) not September’s (6.7%) (see earlier post).
Here’s Sam Coates of Sky News on Rishi Sunak’s speech:
So it feels like this morning was intended to be a Very Big Moment for the PM but people weren’t really given a heads up, didn’t realise and it’s a busy day elsewhere…
Anyway, 5 more pledges https://t.co/zEggsca2hN
— Sam Coates Sky (@SamCoatesSky) November 20, 2023
Rishi Sunak went on to argue that a Labour government would be as dangerous as his predecessor, Liz Truss, and her chancellor Kwasi Kwarteng.
He claimed Sir Keir Starmer and Rachel Reeves wanted to continue the “big government, big spending approach” of the pandemic, with up to £28bn of borrowing a year for Labour’s green plans.
The PM said:
“This makes the same economic mistake as last year’s mini-budget, blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts.”
Those unfunded tax cuts sparked a heavy selloff in government bonds last year, while the pound fell to a record low after Kwarteng said. last September that more tax cuts were coming.
Sunak announces five long-term promises
Rishi Sunak has announced five “long-term decisions” which, he says, the goverment will prioritise for the economy and public finances.
They are… reducing debt, cutting tax, building sustainable energy, backing British businesses and delivering world-class education.
🚨 Sunak speech on inflation
“To grow the economy we will take five long term decisions:
reducing debt,
cutting tax and rewarding hard work,
building domestic sustainable energy,
backing British business
and delivering world class education.”— Jessica Frank-Keyes (@JessicaFKeyes) November 20, 2023
