Prime minister Rishi Sunak and Chancellor Jeremy Hunt have said “tough decisions” are needed on upcoming tax rises. This comes after a meeting on Monday (October 31) to discuss options for the upcoming financial statement being issued on November 17.
The Treasury has warned tax rises are “inevitable” as Rishi Sunak aims to fill a “black hole” in public finances, saying “everybody would need to contribute more in tax in the years ahead”. No exact details have been given by the Treasury, but reports have said it will have to be at least £50 billion.
A source told the BBC the next few years are going to be rough, and a rise in taxes is necessary in order to maintain public services as massive borrowing for energy bill support and the Covid-19 pandemic has caused “a fiscal black hole”. Last month, Chancellor Hunt said the government was required to make “eye-watering” decisions to restore the faith in public finances.
The government has decided to postpone the Chancellor’s fiscal statement until November 17, hoping for a more positive economic outlook. 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."
In the short time since former prime minister Liz Truss resigned, Hunt has reversed almost all of the policies introduced in the September mini-budget. The statement, presented by then-Chancellor Kwasi Kwarteng, was predicted by the Institute for Fiscal Studies to leave a tax shortfall of £62 billion.
Other measures Hunt and Sunak are reportedly considering include ending the pensions triple lock and stopping the rise of benefits to match inflation, which could save the government £9 billion. But it is understood that increases in income tax, VAT and National Insurance are ruled out.