Rishi Sunak has sought to reassure Conservative MPs there will not be “a horror show of tax rises with no end in sight” – but warned the Government “will need to do some difficult things”.
The Chancellor said the Conservatives cannot “simply borrow our way out of any hole” amid disquiet among the party ranks at the handling of the coronavirus crisis.
Many Tory MPs are angry at the series of U-turns Boris Johnson has presided over during the pandemic and fear high taxes could be among the unpopular choices needed for the recovery.
But Mr Sunak and the Prime Minister on Wednesday attempted to placate the new intake of Conservatives, many of whom entered Parliament in the last election by turning former Labour strongholds blue.
In a speech, Mr Sunak told the MPs: “We will need to do some difficult things, but I promise you, if we trust one another we will be able to overcome the short-term challenges.
“Now this doesn’t mean a horror show of tax rises with no end in sight. But it does mean treating the British people with respect, being honest with them about the challenges we face, and showing them how we plan to correct our public finances and give our country the dynamic, low-tax economy we all want to see.”
Addressing the 2019 intake in Parliament, he said the Conservatives “cannot, will not and must not surrender our position as the party of economic competence and sound finance”.
“If we argue instead that there is no limit to what we can spend, that we can simply borrow our way out of any hole, then what is the difference between us and the Labour Party,” he added.
Mr Sunak’s plan to rescue the nation’s finances after unprecedented spending during the crisis is unclear.
But there has been speculation that corporation tax could be hiked, capital gains tax increased, pension tax relief cut or aid spending reduced. Each move would be controversial within wings of the party.
Labour leader Sir Keir Starmer is also opposed to tax rises at this time, instead calling on ministers to get the economy growing again.
His spokesman said: “With the health crisis still not under control and it’s been the deepest economic crisis we’ve faced in generations, this is absolutely the wrong time to be talking about tax rises.”