Rishi Sunak orders billions of pounds in tax cuts as he says it’s time to “reward hard work” in Jeremy Hunt’s autumn statement – and there could be even MORE gifts in the spring

Rishi Sunak has ordered billions of pounds in tax cuts to boost the economy and turn the tide in next year’s election.

As part of a two-stage reform package, Chancellor Jeremy Hunt will announce the first wave of tax cuts tomorrow, with more to follow in the Budget in March.

A Conservative source said the prime minister had told colleagues that the Conservatives needed to “show, not tell” tax cuts after raising the burden to record levels.

Mr Sunak yesterday suggested he wanted to cut income taxes to “reward hard work”, fueling speculation that Mr Hunt was prepared to announce a cut in National Insurance or income tax when he delivers his autumn economic statement tomorrow.

Cuts in corporate taxes are also expected as ministers look to boost investment and economic growth.

Chancellor Jeremy Hunt will announce the first wave of tax cuts tomorrow, with more to follow in the Budget in March

However, the prime minister warned that the fragile state of public finances, coupled with ongoing inflation problems, meant the transition to a lower-tax economy would not be immediate.

In an important economic speech yesterday, he said: “We can’t do everything at once.” It will take discipline and we need to set priorities. But over time we can and will reduce taxes.”

Tory strategists believe tax cuts are crucial to reviving the party’s hopes of winning an election next year. Mr Sunak repeatedly aimed his fire at Labor yesterday, pointing to the party’s controversial plan to borrow £28 billion a year to fund green initiatives.

The prime minister said the program would burden future generations with debt and lead to “permanently higher levels of governance”, as well as higher taxes and higher inflation.

At a press conference in London, the Prime Minister was tight-lipped about exactly which taxes would be cut in the autumn statement.

Whitehall sources said a sharp fall in inflation combined with better-than-expected economic forecasts had convinced the Prime Minister and Chancellor they had scope for personal tax cuts this week. Inflation fell to 4.6 percent last month, meeting the prime minister’s pledge to halve it this year.

Mr Sunak said this had allowed the Government to “move on to the next phase and turn our attention to tax cuts”.

He added: “My argument has never been that we shouldn’t cut taxes.” “It’s that we can’t cut taxes until we get inflation and debt under control.” A cut in Social Security or the Income tax by one percentage point would save a worker earning £30,000 almost £175 a year, while someone earning £50,000 would save almost £375.

A Conservative source said the prime minister had told colleagues that the Conservatives needed to “show, not tell” tax cuts after raising the burden to record levels

The cuts could be partially funded by welfare reforms aimed at bringing more welfare recipients back into the workforce.

The Prime Minister said that “work – not welfare – is the best route out of poverty”. He added that it was a “national scandal” that two million working-age people were not working.

But in a sign that providing relief to businesses will be his top priority, Mr Sunak said: “Our focus is primarily on the supply side and growing the economy.”

Senior Tories believe a £10bn scheme to extend tax relief for business investment is likely to be the key point in tomorrow’s statement.

Mr Hunt told the CBI yesterday he would “unveil a range of measures aimed at boosting business investment and closing this gap with countries such as France, Germany and the United States”.

Mr Hunt told the CBI yesterday he would “unveil a range of measures aimed at boosting business investment and closing this gap with countries such as France, Germany and the United States”.

He said he had “a much more positive view of the UK economy than when I arrived a year ago”.

Plans to reduce inheritance tax and stamp duty have been put on hold for the time being.

Treasury officials warned that cutting stamp duty now would risk a renewed rise in inflation. And the Red Wall Tories said cutting inheritance tax at a time when many families were still struggling with current bills would cause the party to lose touch.

Polls regularly show that the inheritance tax is Britain’s most hated tax, but suggestions that the Conservatives could abolish it entirely are considered false.

A senior Tory told the Mail that the Prime Minister expects tax pledges will only be credible at next year’s election if the government has already started cutting taxes.

Mr Sunak also accused Sir Keir Starmer of failing to learn the lessons of Liz Truss’ disastrous tenure as prime minister

“His view is that people won’t believe what we say on taxes until we start delivering the results,” the source said.

“He thinks we have to show, not tell.” But if we can deliver something now, and even more on the budget, then we can show that we mean what we say.”

Mr Sunak also accused Sir Keir Starmer of failing to learn the lessons of Liz Truss’ disastrous tenure as prime minister.

He said Labor had opposed any measure to shore up public finances. And he warned that Labour’s borrowing plans would make “the same economic mistake as last year’s mini-Budget”.

“Wasting tens of billions of pounds on unfunded spending is just as dangerous as wasting tens of billions of pounds on unfunded tax cuts,” he said.

“It’s about the easy way out.” And the result is the same: higher inflation, financial uncertainty and more debt for our children and grandchildren.”

Labour’s national campaign coordinator Pat McFadden said: “The Tories have reneged on so many promises from the past.” Why should people believe they will keep their promises for the future?

Additional reporting: Jessica Beard