Rishi Sunak issued warning over tax hikes from 1922 committee

Mr Sunak told MPs yesterday there will not be "a horror show of tax rises with no end in sight"
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A warning that tax hikes in November’s Budget could “stifle economic growth and prospects” was issued by the chairman of the powerful 1922 Committee representing Conservative MPs today.

Sir Graham Brady appeared to fire a warning shot across the bows of Chancellor Rishi Sunak following reports that the Treasury is poised to launch tax raids in voter-sensitive areas like pensions relief and fuel duty.

Asked if tax rises are a necessity, Sir Graham said: “Well, I think the necessity is to make sure that we don't make this crisis any worse than it has to be, and fundamental to that is making sure that the country gets back to work so people resume as far as possible normal life.”

He was then asked on BBC Radio 4’s Today programme if tax rises should be part of that. “Well I think we have to be aware that raising taxes, and raising the wrong types of taxes especially, can be a way in which you stifle economic growth and prospects, rather than guaranteeing them,” he replied. “So, I think we should be very, very cautious in exploring tax increases.”

His comments will be taken seriously in Government because Sir Graham is seen as the shop steward of Tory backbenchers at Westminster. The former minister has regular meetings with the Prime Minister and the Chief Whip where he passes on the private and public anxieties of MPs.

Mr Sunak told MPs yesterday there will not be "a horror show of tax rises with no end in sight". Addressing newly elected Conservative backbenchers he warned that the Government cannot "simply borrow our way out of any hole".

"We will need to do some difficult things, but I promise you, if we trust one another we will be able to overcome the short-term challenges,” said the Chancellor.

"Now this doesn't mean a horror show of tax rises with no end in sight. But it does mean treating the British people with respect, being honest with them about the challenges we face, and showing them how we plan to correct our public finances and give our country the dynamic, low-tax economy we all want to see."

The Chancellor’s words left no MPs in any doubt that tax rises are on the way. Treasury sources have denied they are considering putting 5p on fuel duty, which was one of the reports that alarmed MPs recently. There has also been speculation that corporation tax could be raised, capital gains tax increased, pension tax relief cut to 30p maximum or aid spending reduced. Boris Johnson, addressing the same meeting, warned MPs: "I've got to warn you it's about to get tougher. The waters are about to get choppier. But we are going to deal with it.

"And when we build back better and faster and greener we will create a platform for the dynamism and innovation and enterprise to flourish and to create new jobs."

Labour leader Sir Keir Starmer is also opposed to tax rises at this time, instead calling on ministers to get the economy growing again.

His spokesman said: "With the health crisis still not under control, and it's been the deepest economic crisis we've faced in generations, this is absolutely the wrong time to be talking about tax rises."

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