Michael Gove hints at possible tax cuts from Rishi Sunak
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Conservative minister Michael Gove has kept tight-lipped over when any planned tax cuts from Chancellor Rishi Sunk might be announced. When pressed by Nick Ferrari on LBC however, Mr Gove did strongly hint that a plan to reduce the tax burden on Britons is very much in the works at the Treasury.
Mr Gove told LBC: “The Chancellor and the PM want to and will introduce tax cuts.
“But the Chancellor would kill me if I announced anything before he did.”
Despite being pressed by Mr Ferrari, the Government’s Levelling Up Secretary stuck to his guns and refused to offer any timeframe for the Chancellor’s tax reduction measures.
“I respect Rishi too much to say more at this stage other than as he laid out in a speech earlier this week, he is laser-focused on reducing the cost of government and reducing tax in due course.”
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Tax changes are not the only economic policy conundrum for Boris Johnson, with the Prime Minister warning of a 1970s-style “wage-price spiral” if pay packets increase in line with soaring prices as he set out an extension of the right to buy scheme to housing association tenants.
The Prime Minister also announced a “benefits to bricks” scheme on Thursday to allow welfare payments to secure mortgages as he sought to get his embattled premiership back on track.
Mr Johnson pledged a review of the mortgage market under plans to help renters onto the property ladder after surviving a bruising Tory revolt against his leadership.
But he suggested in a major speech in Blackpool there should be restraint on wage rises on the day the cost of a full tank of petrol for a family car exceeded £100 for the first time.
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Calling for caution in the face of rapidly rising inflation, Mr Johnson warned the Government would “fan the flames of further price increases” if it tried to spend its way out of the cost-of-living crisis.
“We can’t fix the increase in the cost of living just by increasing wages to match the surge in prices. I think it’s naturally a good thing for wages to go up as skills and productivity increase – that’s what we want to see,” he added.
“But when a country faces an inflationary problem you can’t just pay more and spend more, you have to find ways of tackling the underlying causes of inflation.
“If wages continue to chase the increase in prices then we risk a wage-price spiral such as this country experienced in the 1970s.”
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Unions reacted with anger, with the TUC accusing Mr Johnson of abandoning his commitment to build a “high-wage economy” with “nonsense” claims about raises.
But the Prime Minister warned that big pay rises could create “stagflation” – inflation combined with stagnant economic growth, which blighted the 1970s.
He stopped short of explicitly repeating Bank of England governor Andrew Bailey’s suggestion that workers should not ask for big pay rises to help control inflation, which is forecast to hit around 10 percent this year.
But Mr Johnson argued salary hikes in line with inflation would lead to the need to “slam the brakes on rising prices with higher interest rates”, which would increase Government spending, and impact on jobs, mortgages and rents.
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