In a sign tax rises could be around the corner, Rishi Sunak said there was no “easy cost-free answer” and that there were “hard choices everywhere”, but that the government had a duty to leave public finances strong.
Speaking at the Conservative Party conference today (October 5), Mr Sunak said: “We have a sacred responsibility to future generations to leave the public finances strong, and through careful management of our economy, this Conservative government will always balance the books.
“If instead we argue there is no limit on what we can spend, that we can simply borrow our way out of any hole, what is the point in us?”
Official figures published last month showed government borrowing totalled £173.7bn between April and August, the highest amount since records began.
Total UK debt passed £2tn for the first time in history in August, exceeding the size of the UK economy.
Today, Mr Sunak warned the country was “only part way through this crisis”. He said: “What began in March as a health emergency has grown and now reaches deep into our economy and society.
“Not only does it endanger lives, but jobs and education.”
Looking forward, Mr Sunak said he was committed to creating and extending opportunity to as many people as possible in a bid to support employment figures.
He said: “We will not let talent wither, or waste, we will help all who want it, find new opportunities and develop new skills.
“Through more apprenticeships, more training and a lifetime skills guarantee. Our Kickstart Scheme will help hundreds of thousands of young people into good quality work. And we will help small businesses adapt.”
Mr Sunak pledged to keep trying to find ways to support people and businesses, to keep listening, and to keep striving to be creative in response to the challenges the economy faced.
Rachael Griffin, tax and financial planning expert at Quilter, said: “In its 2019 manifesto, the government promised to reduce debt, which is clearly a significant challenge after six months of bumper borrowing, and the likelihood of more to come.
“In order to recover the situation and re-align the public finances, there is every possibility that the chancellor will be compelled to explore options for increasing tax revenues.
“Although he has deferred the difficult choices for the time being, by cancelling the Autumn Budget, he will surely be considering what levers he can pull to begin to reverse the tide.”
Mr Sunak has already begun reining in some of the measures put in place to support people through the coronavirus crisis.
The furlough scheme will close at the end of October, with businesses instead able to use the Job Support Scheme which will partially pay part-time workers' wages from November.
The government is also undertaking a review of the impact of tax reliefs, however has so far ruled out reviewing one of the largest reliefs, the £38bn pension tax relief.
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