Rishi Sunak has insisted he will not trash the Tories’ reputation for “fiscal responsibility” and that tax cuts will only come when public finances are back on a “sustainable footing”, in the face of backbench unhappiness with the government’s spending plans.
In his first in-person party conference speech since taking charge at the Treasury, the chancellor said it would be “un-Conservative” and economically irresponsible to “stack up bills for future generations to pay”.
His warning came amid a growing row between new Tory MPs serving deprived communities who want large cash injections in their areas to help them “level up” and colleagues who think the tax burden is already too high and that government spending should be much more restrained.
Sunak’s address was hotly anticipated. He is popular among party members and is thought likely to be a frontrunner in any future leadership contest. He announced the creation of 2,000 artificial intelligence (AI) scholarships for disadvantaged young people and that the number of researchers on the AI Turing fellowship scheme would be doubled. He also confirmed that the next stage of the government’s “plan for jobs” would be extended to help unemployed people aged over 50 back into work.
Sunak admitted there were supply chain “challenges”, after warnings that goods manufacturing and deliveries could be severely hampered in the run-up to Christmas, but insisted these were being seen around the world.
He said the recently announced national insurance rise, which is due to kick in next spring, was unpopular and even viewed as “un-Conservative” by some, but said there could be tax cuts only when public finances had been “put back on a sustainable footing”.
The chancellor also accused Labour of stoking divisions. He sought to present the Conservatives as a united party – despite widespread unhappiness among senior Tories about the tax hike compounding the strain on people also hit by rising energy and food bills, as well as the universal credit GBP20 uplift having ended.
Addressing the universal credit cut, Sunak said it was not right for claimants “just to increase their benefits” and “lean ever more on the state”, and that a more effective way of increasing their income would be through “good work, better skills and higher wages”.
The former cabinet minister David Davis said he was slightly worried the country was sleepwalking towards a second winter of discontent. He said the combination of the national insurance rise leaving people with lower wages, companies hesitating about investing, higher inflation and the added cost of energy was “going to hit the poorest hardest, and you may end up with a cost of living crisis”.
“At the moment, the public loves Boris,” Davis added. “But if you can’t afford to get through the week … that’s when it starts to bite, that’s when it starts to hurt – and then you start to be critical. So that’s when we have to worry, and I do worry about that.”
Another Tory MP, Steve Baker, said the party needed to rediscover what it meant to be a Conservative, and that many of his colleagues would much rather see Thatcherite policies based on lower taxes and reduced regulation.
“If they were asked to go through the lobbies for that, be brave and do the right thing, they would go through like spring lambs,” he said. “Instead, we’re grinding miserably forward, doing Ed Miliband’s Labour policies. We’re hating every minute and trying to claim it’s Conservatism.”
Talking at another event, Baker said: “Sorry as I am, we are all socialists now – that’s got to change.”
Bridget Phillipson, the shadow chief secretary to the Treasury, said the chancellor appeared to be “in denial about the scale of the economic crisis he has overseen” and had no plan or will to tackle it.
She claimed Sunak had overseen the worst economic crisis among G7 countries, with the UK economy shrinking by 9.9% in 2020, and added that recovery was still further away than in Canada, France, Germany, Italy, Japan and the US.
Phillipson added: “Instead of putting forward a plan to boost our economy and invest in the skills we need and the challenges we need to face, he’s pretending there’s no work to be done. Labour will tax fairly, spend wisely and grow our economy.”