A Cabinet minister wriggled on who will bear the brunt of looming tax hikes today – as the Bank of England warned firms are cutting jobs.
Treasury Chief Secretary Darren Jones dodged on what counted as a ‘modest income’ after promises that those workers would be protected.
In a round of interviews, he also refused to say how the government will pay for U-turns on welfare curbs and restoring the winter fuel allowance. Instead he stressed that all policies will be ‘fully funded’ at the Budget – when analysts believe Chancellor Rachel Reeves could have to fill a £30billion black hole.
The comments came as Bank governor Andrew Bailey hinted that interest rates will come down more quickly as businesses reel from eye-watering national insurance increases in the last fiscal package.
He said companies are ‘adjusting employment’ as a result of the raid and Brits were ‘also having pay rises that are possibly less than they would have been if the NICs change hadn’t happened’.
Mr Bailey told the Times the British economy was growing behind its potential and that ‘slack’ could help keep inflation down.
Treasury Chief Secretary Darren Jones dodged on what counted as a ‘modest income’ after promises that those workers would be protected
Transport Secretary Heidi Alexander yesterday declined to rule out tax increases this Autumn, saying the government would base its approach on ‘fairness’ and protect those on ‘modest incomes’
The base rate was held at 4.25 per cent, but the governor gave a strong indication that it might fall at the next review on August 7.
‘I really do believe the path is downward,’ Mr Bailey said. ‘But we continue to use the words ‘gradual and careful’ because… some people say to me ‘why are you cutting when inflation’s above target?’
Transport Secretary Heidi Alexander yesterday declined to rule out tax increases this Autumn, saying the government would base its approach on ‘fairness’ and protect those on ‘modest incomes’.
That fuelled speculation about a ‘wealth tax’ – something Labour MPs have been baying for.
Mr Jones said: ‘I’m not going to define what a modest income is. But what I will tell you is what our manifesto said, which is that we’re going to protect working people by not increasing the headline rates of income tax, VAT or national insurance.’
The minister said it was ‘normal’ for businesses to make ‘adjustments’ to plans as a result of the NICs hike.
Bank of England governor Andrew Bailey hinted that interest rates will come down more quickly as businesses reel from eye-watering national insurance increases in the last fiscal package
‘We’ve also seen the creation of hundreds of thousands of new jobs across the country, and it’s normal for business to make adjustments to their plans, depending on the cost of business, in the normal way,’ he said.
‘But we’re really focused as a Government in supporting business to create more jobs.
‘That’s why our plans to invest in the skills system, reducing energy bills for businesses, getting these trade deals across the line with the EU, India and the United States, for example, are all examples of the Government rolling up its sleeves to make sure that we’re creating opportunities for businesses to grow and to be profitable in our country’.
