The Treasury has said that tax rises are “inevitable” after prime minister Rishi Sunak and chancellor Jeremy Hunt met on Monday for talks ahead of the November 17 fiscal statement.
Reports refer to a £50 billion “fiscal black hole” that must be filled, with key decisions set to be made on tax and spending ahead of November 17.
While the Treasury stopped short of giving any details on what the tax hikes could consist of, it warned that “everybody would need to contribute more in tax in the years ahead” despite there being an agreement “on the principle that those with the broadest shoulders should be asked to bear the greatest burden”.
The Treasury said: “Given the eye-watering size of the fiscal black hole, the PM and the chancellor agreed that tough decisions are needed on tax rises, as well as on spending.”
The Telegraph quotes a Treasury source as saying that a combined approach of 50 per cent public spending cuts and 50 per cent tax rises will be adopted.
The Telegraph has also earmarked former prime minister Liz Truss’ mini-Budget as a blame factor in creating the fiscal shortfall.
According to the BBC, other measures that the government is considering include ending the triple lock on pensions and not hiking benefits in line with inflation, which could save up to £9 billion. Any possible increases in income tax, National Insurance and VAT are said to have been dismissed.
Furthermore, the PM is reportedly weighing up the prospect of freezing international aid and cutting investment spending.
Sunak is yet to commit to increasing defence spending to three per cent of GDP which suggests that this could be one area where he may look to cut back. However, defence secretary Ben Wallace has indicated that he will resign should Sunak fail to honour this.
