Raising taxes on businesses and people ‘stifling’ growth, Tories warn Chancellor
Jeremy Hunt’s autumn statement faced criticism from some quarters of the Conservative party.
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Raising taxes on both businesses and hard-working people risks “stifling” growth and productivity, the Chancellor has been warned by Tory MPs.
A Conservative former minister meanwhile called on the Government to ensure that conditions on interest rates imposed by the Bank of England were not “too tight for too long”.
Jeremy Hunt’s autumn statement faced criticism from some quarters of the Conservative party, with South Dorset MP Richard Drax warning against both the Government and the opposition “promising to spend billions” more pounds.
Can he therefore confirm that the anti-inflationary measures he has taken today will mean that the pressure to raise interest rates will be minimised and that there is a much greater chance that they will fall earlier than would otherwise have been the case?
Mr Drax told the Commons: “I have huge sympathy for my right honourable friend, we are facing severe financial challenges for the reasons he explained so well.
“But both sides of the House are promising to spend billions and billions more pounds. Can I just remind the House that it is the private sector and hard-working people through their taxes that pay for Government expenditure?
“So will my right honourable friend agree with me that raising taxes on both risks stifling the growth and productivity that he and I both want?”
Mr Hunt replied: “He is right to make the case for a lightly taxed dynamic economy and I would like to bring taxes down from their current level.
“I think we are faced with the necessity to do something fast to restore sound money and to bring inflation down from 11% which is why we’ve made difficult decisions today but yes, he is absolutely right, there is no future for this country unless we get back on the path to being a lower taxed economy.”
Elsewhere in the statement, Conservative former cabinet minister Dr Liam Fox told the Commons: “He will be aware that some of us believe that the Bank of England maintained monetary conditions that were too loose for too long.
“But that would also be a mistake to maintain monetary conditions that are too tight for too long.
“Can he therefore confirm that the anti-inflationary measures he has taken today will mean that the pressure to raise interest rates will be minimised and that there is a much greater chance that they will fall earlier than would otherwise have been the case?”
Mr Hunt replied: “He is absolutely right to focus on this issue because every 1% increase in interest rates is about £850 more on the average mortgage, so it’s hugely important to families up and down the country. Now what the OBR have said is that the measures we’ve taken today will mean that inflation is lower than it would otherwise have been.
“That means the Bank of England is under less pressure to increase interest rates, which for the reasons he knows, are such a worry for so many families.”
Conservative former minister David Davis said Mr Hunt delivered a “remarkably skilful statement” but the pressed the need for the Chancellor to “reinforce” the agenda for growth at the budget.
He told the Commons: “Of course fiscal responsibility is incredibly important but one of the risks that go with it is the risk of worsening a recession that comes, so it’s particularly important that on small businesses, on investment, on innovation he came up with a radical new agenda for growth.
“Can I ask him when he comes to deliver his budget in the spring, after hopefully gas prices have stabilised and financial markets have stabilised, he reinforces that agenda for growth?”
Mr Hunt replied: “If we are going to go to the British people as a party that can deliver a plan for our economy, they need to see we’ve made progress in the growth agenda, they need to see where this country is going to excel – not just in the next two years but in the next 20, 30, 40 years – and I think they will reward the party that demonstrates it understands how to do that and that’s what we do know.”