Rishi Sunak threatens to snatch Universal Credit cash to pay for tax cuts

07 January 2024 , 08:34

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Rishi Sunak said tax cuts require 'difficult decisions on public spending' (Image: PA)

Rishi Sunak has threatened to snatch cash from families on Universal Credit to pay for tax cuts.

The PM hinted that pre-election tax cut giveaways will be made on the back of "difficult decisions to control welfare". He boasted the Autumn Statement in November delivered "the biggest set of tax cuts in one event since the 1980s" despite millions more being dragged into higher tax brackets.

Mr Sunak told The Sunday Telegraph: "When I say that I want to keep cutting taxes, that is what we're going to deliver. We're going to do that responsibly. That requires difficult decisions on public spending. It requires difficult decisions to control welfare. Those, I believe, are the right things to do for our country. That is what I want to do.

"I'm very clear: I want to control public spending, I want to control welfare, which we're doing. And because we're doing that, and because we're being disciplined with borrowing and our debt, we're going to be in a position to cut taxes."

The PM said it was his "priority" to "keep cutting people's taxes" after a 2p cut in national insurance was introduced on Saturday. "There is no way we can do that unless we restrain the growth in the public sector and government spending," he said.

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The pledge to offer fresh tax cuts while tightening the reins on public spending appears to be an attempt from Mr Sunak to draw a dividing line with Labour ahead of a general election. The PM claimed "taxes are going up" if Keir Starmer gets into No10. That is despite the Labour leader pledging in September that he would not raise taxes, and Shadow Chancellor Rachel Reeves last week telling The Daily Mirror: "You will not see increases in taxes on working people under a Labour government."

The PM's latest comments come after the main rate of national insurance was cut by two percentage points, from 12% to 10%. Chancellor Jeremy Hunt said the pre-election cut means families with two earners are nearly £1,000 better off a year.

But Labour said it amounted to a "raw deal" as Mr Hunt has kept tax thresholds frozen - a fiscal policy first introduced by Mr Sunak when he was Chancellor during the pandemic. The frozen thresholds will provide an automatic tax rise to millions as their wages increase with inflation while tax bands remain static.

The Prime Minister declined to say what taxation he would like to see reduced or abolished but said he believed that British society should be "one where... hard work is rewarded".

After the autumn statement in November, the Government faced pressure by Tory MPs to go further and cut income tax or inheritance tax. Mr Hunt, in an interview with the BBC on Saturday, called inheritance tax "pernicious" but said he could not say "whether it is going to be affordable to reduce taxes" in 2024.

It was announced last month that the Budget will be held on March 6. Mr Sunak told broadcasters on Thursday that his "working assumption" was that he would call an election in the second half of the year, ahead of the January 2025 deadline.

Sophie Huskisson