Conservative conference: Rishi Sunak declines to rule out further tax hikes

Chancellor says it wouldn’t be ‘right for me to pre-empt’ local government finance settlement

(Getty Images)

Rishi Sunak, the chancellor, has declined to rule out a hike in income tax ahead of the next election or whether the government will allow councils to increase bills in order to pay for social care.

It comes after the Local Government Association (LGA) warned that council tax may have to rise to plug a black hole in social care, claiming that authorities in England face extra cost pressures of almost £8 billion by 2024/5 “just to keep vital local services running at today’s levels”.

Boris Johnson is also “acutely aware” of the state of local authorities’ finances – depleted during the Covid crisis – and is mulling proposals to increase the social care element of council tax, according to The Times.

Quizzed on whether he could guarantee the public won’t see a rise in council tax, the chancellor told Sky News: “Social care is funded by a max of different ways — one way is through local taxes, like council tax.

“Later in the year, we have something called the local government finance settlement, where the secretary of state for local government sets out all the plans for local government for the coming year.”

But, he said, it wouldn’t be “right for me to pre-empt that”, adding: “What people should know is we want to put more money into social care that’s why we took the decision we did [to increase national insurance]”.

But with a looming increase in national insurance in April 2022, rising energy bills, the decision by ministers to end the £20-per-week universal credit uplift, and the end of the furlough scheme, Labour is likely to seize on the comments.

Describing the manifesto-busting decision to increase national insurance contributions from April 2022 — which will later become and NHS and social care levy — Mr Sunak added: “No chancellor wants to do that.”

“But just remember why we did that — that was to make sure our NHS could get the significant resources that it needs to help recover strongly from coronavirus and also alongside that to usher in some reform to social care that governments have ducked for decades.”

In a separate interview on BBC Breakfast ahead of his speech to the Conservative conference, Mr Sunak also declined to rule out hiking income tax ahead of the next election.

“Recently we did make a significant announcement on tax and it was a difficult decision to make, especially for a Conservative chancellor and a Conservative prime minister, but we took that decision because we wanted to make sure the NHS got the significant funds it requires to help recover strongly from coronavirus.”

Elsewhere, the chancellor echoed comments from a recent interview, conceding that supply chains may still face disruption at Christmas, but insisted the government was trying to “mitigate” the problem.

“As we’ve said, we’re seeing supply disruption, not just here but in lots of different places, and there are things we can try and mitigate, and we are,” Mr Sunak told BBC Radio 4’s Today programme.

“But we can’t wave a magic wand. There’s nothing I can do about the decision by a country in Asia to shut down a port because of a coronavirus outbreak — there’s very little I can do, or anyone can do about that and that will affect lots of countries and lots of supply chains.

“But be assured we are doing everything that is in our control to try and mitigate some of these challenges.”

Asked again on whether there could be shortages at Christmas, the chancellor said: “We are doing absolutely everything we can to mitigate that.”