Chancellor vows to cut taxes for businesses as he warns of 'tough' months ahead

19 May 2022, 00:26 | Updated: 19 May 2022, 06:28

Chancellor Rishi Sunak has vowed to cut taxes for businesses to help tackle the cost of living crisis, promising them he is 'on their side'.

Speaking at the annual CBI dinner on Wednesday, Mr Sunak warned of a "tough" few months ahead and promised to cut tax for businesses to enable them to invest and train.

"Our role in Government is to cut costs for families. I cannot pretend this will be easy. The next few months will be tough, but where we can act, we will," he told businesses.

"We need you to invest more, train more, and innovate more.

"And as I’ve said previously, our firm plan is to reduce and reform your taxes to encourage you to do all those things."

He then said: "In the autumn Budget we will cut your taxes."

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Mr Sunak has been criticised for offering tax cuts to businesses at a time where soaring energy bills and record rates of inflation are pushing up the cost of living for millions of Brits.

On Wednesday hopes of a windfall tax on energy companies to help tackle the crisis were dashed by No10 despite Treasury officials reportedly believing it is unavoidable.

The Treasury believes a windfall tax is "politically unavoidable" because of the strong message of solidarity it would send to the British public, The Times reports.

Chancellor Rishi Sunak himself is said to be coming round to the idea.

But the paper says Boris Johnson's advisers are resisting the move on the grounds it is "unconservative".

The UK has been facing a worsening cost of living crisis.

A combination of soaring inflation, rising bills and hikes in national insurance and council tax have left more people struggling to make ends meet.

The Government has been falling under increasing pressure to do more to help people cope - in particular, introducing a one-off windfall tax on big oil and gas companies.

Spain and Italy have already announced such a tax, but the UK has, so far, resisted.

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At PMQs on Wednesday, Labour leader Sir Keir Starmer insisted that Mr Johnson would make an "inevitable U-turn" on the policy.

He accused the Prime Minister of letting people "struggle when they don't need to".

"[Mr Johnson] doesn't actually understand what working families are going through in this country," he said.

"Struggling about how they're going to pay their bills.

"Whilst he dithers British households are slapped with an extra £53 million on their energy bills every single day.

"Meanwhile every single day North Sea oil and gas giants rake in £32 million in unexpected profits.

"Doesn't he see that every single day he delays his inevitable U-turn, he's going to do it, he's choosing to let people struggle when they don't need to."

On Wednesday Mr Sunak warned of a "tough" few months ahead, citing a "perfect" storm of supply shocks rocking Britain and vowing he stood ready to do more to help people cope with the impact of rising inflation.

"I hardly need to tell this audience that the economic situation is extremely serious," he said.

"A perfect storm of global supply shocks is rolling through our economy simultaneously."

Among the supply shocks, Mr Sunak listed global demand shifting from services to goods, Russia's invasion of Ukraine, and a fresh wave of lockdowns in China.

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Mr Sunak also used his CBI speech to outline what the Government had already done to tackle the cost of living crisis.

"We have provided £22 billion of direct support, and we are going further," he said.

"In October, we're cutting energy bills by a further £200.

"In just a few weeks' time, the national insurance threshold will increase to £12,500.

"That's a £6 billion tax cut for working people, and of course as the situation evolves our response will evolve.

"I have always been clear, we stand ready to do more."