United Kingdom

Tories' war of words on tax rises: Kwasi Kwarteng rejects calls for higher levies

Business Secretary Kwasi Kwarteng rejected calls for tax rises yesterday as a Tory debate raged over how to tackle the huge deficit caused by the pandemic.

Former party leader William Hague has backed Rishi Sunak to raise taxes in today's Budget. He said the dire state of public finances meant 'at least some business and personal taxes have to go up'.

Lord Hague said yesterday that those opposing tax rises harboured 'dangerous illusions' that low interest rates would let Britain borrow its way out of the crisis.

Business Secretary Kwasi Kwarteng rejected calls for tax rises yesterday as a Tory debate raged over how to tackle the huge deficit caused by the pandemic

Former party leader William Hague has backed Rishi Sunak to raise taxes in today's Budget. He said the dire state of public finances meant 'at least some business and personal taxes have to go up'

But in an intervention that underlines Cabinet tensions, Mr Kwarteng predicted 'strong growth' this year and said it was vital that the economic recovery was not 'crushed' by higher taxes.

He said growing the economy will be the 'best way to deal with the growing deficit'.

Asked about Lord Hague's support for tax rises, Mr Kwarteng told BBC Radio Four's Today programme: 'That's very much up to Lord Hague. My view is that the way to get out of this difficult situation is to grow the economy.'

The Business Secretary predicted the UK would see 'strong growth' by the end of this year, adding: 'That will be the best way to deal with the growing deficit.'

Mr Kwarteng acknowledged that the Chancellor 'has to look at tax levels', but added: 'He also has to deliver growth - our focus will be very much on growing the economy.'

Mr Sunak is expected to begin the process of dealing with the deficit in this afternoon's Budget. Whitehall sources have confirmed that the Chancellor will freeze income tax thresholds for three years, raising £6 billion and dragging 1.6 million people into higher tax bands.

Mr Sunak (pictured calling The Queen on March 2) is expected to begin the process of dealing with the deficit in this afternoon's Budget.

He is also expected to raise corporation tax from 19 per cent to 20 - and set out a 'pathway' to increase it to 23 per cent by the time of the next election.

The Mail revealed last week that plans for a 5p rise in fuel duty have been blocked by the Prime Minister.

But Lord Hague said that, with last year's borrowing set to top £400 billion and the national debt standing at £2.1 trillion, Mr Sunak was right to start looking at tax rises.

Lord Hague, a close ally of the Chancellor, said that those opposing tax rises now were buying into 'dangerous illusions' that low interest rates meant the UK could borrow its way out of the crisis.

Writing in the Telegraph, he said: 'It pains me to say, after spending much of my life arguing for lower taxes, that we have reached the point where at least some business and personal taxes have to go up.

'Conservatives need to remember that for 200 years, from Pitt in 1797 to Thatcher and Cameron in our own day, keeping the country creditworthy has stood them in very good stead.'

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