Rishi Sunak ‘making economy worse’, says senior Tory in cost of living row

Treasury has ‘no strategy’, says David Davis – amid new fears poorest will miss out on council tax rebate

Rishi Sunak is “making things worse” when it comes to the UK economy, the senior Conservative MP David Davis has warned in a stinging attack on the chancellor.

The former cabinet minister said Mr Sunak and his Treasury team had “no strategy” to deal with the mounting cost of living crisis, following the chancellor’s heavily-criticised Spring Statement.

“What you’re seeing is a Spring Statement driven by headlines. My view of the Treasury’s economic strategy is that there isn’t one,” Mr Davis told LBC on Sunday.

The senior backbencher added: “The chancellor said: ‘I can’t solve everything’. Actually, what the chancellor is doing is making things worse.”

Mr Davis said “quite a lot” of his fellow Tory MPs felt the same way. “The truth is a lot of them will be getting problems pushing back from their own constituents [on the cost of living].”

Amid a growing backlash over his Spring Statement, Mr Sunak is reportedly weighing up a further rebate on council tax bills in a new multi-billion-pound package after No 10 made clear its “panic” over the cost of living.

“We’ve already looked at this and concluded that council tax is the best way to do it,” a Treasury source told the Sunday Times. “You’ve got an existing mechanism ... It would make sense to do it like that again.”

Education secretary Nadhim Zahawi hinted that Mr Sunak is planning further help with living costs in the months ahead. “I think he will continue to keep an eye on this, it’s only right,” he said on Sky News’ Sophy Ridge on Sunday.

He added: “It’s irresponsible for me to say ‘job done’ because energy prices are volatile, inflation remains high, so it would be absolutely irresponsible to say ‘job done’.”

It comes as union leaders warned that both schools and hospitals would suffer a “mass exodus” of staff unless public sector employees receive pay rises matching inflation.

Unison said that unless teachers, NHS workers and other public sector staff received “inflation-busting” pay rises, they would quit for better paid work in the private sector.

Meanwhile, opposition parties claimed that a “swindle” means around 1.3 million eligible families may miss out on Mr Sunak’s previously-announced £150 council tax rebate.

They pointed to the Office for Budget Responsibility (OBR) prediction that 20 per cent of those who do not pay their council tax by direct debit will not take up the rebate – potentially saving the government £195m.

Local authorities warned they have not been given any extra resources to deliver the rebate to those who don’t pay via direct debit – leading to fears that some of the poorest and most vulnerable will not receive the tax cut.

Liberal Democrat Leader Sir Ed Davey said: “It is staggering that over one million families are set to miss out because of this Conservative government’s half-baked plans.”

Sir Ed added: “Rishi Sunak must confirm that anyone that misses out on the rebate will get their £150 cheque in the post. No-one should go without the help they need because of this Conservative government’s incompetence.”

Boris Johnson and his team are said to be “panicking” about the impact of the rising food and energy bills ahead of May’s local elections.

Downing Street special advisers have reportedly seen private polling showing that the cost of living is now the number-one public concern for the British public – surpassing the NHS and healthcare.

Vicky Pryce, former head of the Government Economic Service, said there was “huge tension” between No 10 and the Treasury on how to handle the cost of living crisis.

She told LBC on Sunday that despite calls to provide more help, the chancellor “would like to be seen as someone that brings the finances back to some sort of normality”.

Labour branded the chancellor “Mr Tax” on Sunday, accusing him of “acting in his own interest” rather than those of the British people.

Shadow work and pensions secretary Jon Ashworth gave him the nickname while warning that pensioners have been “cutting back on hot meals” and “forgoing hot showers” as they cannot afford the cost.

Labour analysis of the Office of Budget Responsibility figures found that average households would be hit with rises of £3,000 by 2026/27.

Mr Ashworth told Sophy Ridge On Sunday on Sky News: “Rishi Sunak absolutely had more room for manoeuvre in this Spring Statement and mini-budget, but rather than acting in the interests of the British people, he was playing games.

“He was acting in his own interest because he thinks by offering an income tax cut in two years, that will help him politically with Conservative MPs if there’s a leadership contest, or that’ll fit the Tory election grid.”

The government will uprate benefits by 3.1 per cent in April – though inflation is expected to average nearly 8 per cent over the year. Mr Ashworth said it amounted to a “very severe real-terms cut”.

Labour also said analysis showed that hard-pressed pensioners face the biggest cut to the state pension in half a century with real-terms losses of up to £427 next year.