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Rishi Sunak hints at fuel duty cut in Spring Statement

Rishi Sunak has given a strong hint that he will cut taxes on fuel in this week’s Spring Statement, while warning that the days of higher UK public spending — including on defence — are over.

The chancellor said he would help families struggling with the cost of living when he presents updated economic forecasts on Wednesday, saying: “Where we can make a difference, of course we will.”

Sunak admitted that energy prices were “the number one priority” for people at the moment and that, as MP for the rural Yorkshire constituency of Richmond, he knew fuel prices were “a big issue”.

“It’s something that’s challenging to families, I get that,” he told the BBC’s Sunday programme. He said his policy was to take “targeted action where we think there is most acute pressure”.

Sunak is under pressure to go further in cutting taxes more generally and said that they would come down “over time”; he blamed the pandemic for the fact Britain has its highest overall tax burden since the 1950s.

But he refused to say whether he would cut income tax or change the threshold for the payment of national insurance in the Spring Statement, as many Tory MPs would like.

Sunak made it clear that he would now strongly resist pressure to increase public spending and borrowing — some of it coming from his Downing Street neighbour, Prime Minister Boris Johnson, in recent weeks.

In particular, Sunak appeared to rule out an emergency increase in defence spending, arguing that the military budget had already been allocated a further £24bn, despite the Russian invasion of Ukraine.

“We acted and did this before this happened, and that’s a good thing,” Sunak said, referring to the war in Ukraine.

Sunak insisted the government’s integrated defence and foreign policy review last year recognised the Russian threat, although critics claim the document was overly preoccupied with a “tilt to the Asia-Pacific”.

He said his priority was to get value from the money the government was already spending, notably in the NHS, and announced an efficiency drive to save £5.5bn, which he said would be put back into public services.

The chancellor said his priority was to cut taxes over the rest of the parliament, after analysis showed he had raised taxes more in two years than Gordon Brown, former Labour chancellor, did in a decade.

Sunak insisted that Brown had not had to contend with a pandemic, but his credibility with Conservative MPs now rests on his ability to control spending and push down taxes before the election.

Rachel Reeves, shadow chancellor, told Sky News’s Sophy Ridge on Sunday programme: “He keeps saying he’s a low-tax chancellor. On Wednesday he has a chance to prove it.”

The Labour party is calling for a reversal of the £12bn national insurance rise, which Sunak insisted would go ahead in April to help fund the NHS and deal with a treatment backlog. Labour also wants a windfall tax on North Sea oil companies.

But Reeves said Labour would not “stand in the way” if Sunak decided to cut fuel duty by 5p a litre in his statement next week.

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