A veteran Tory MP was bone-dry in his sardonic questioning why the government was resorting to tax-and-spend to give households a handout rather than simply cutting taxes to allow families to absorb cost of living increases by keeping more of their own money.
British households are now being clobbered from all sides on the cost of living: beyond rising cost of living inflation, the government is also forcing through a much-criticised and costly £12 billion tax rise on earned income, the Bank of England is putting up interest rates, and the energy regulator has just approved the largest rise in energy bills ever.
Boris Johnson’s government is on hand to help though, and Chancellor of the Exchequer Rishi Sunak announced £9 billion worth of support for British households to help them weather the coming surge in the cost of living. While the cash giveaway has been headline-grabbing, whether it is actually the best way to help people was immediately questioned, especially given the announcement came just days after the government confirmed it would be going ahead with an “absolutely vital” tax grab of an eye-watering £12 billion.
There have also been suggestions — not so long ago made even by the Prime Minister himself — that a more effective way to cut household bills is to reduce taxes on the energy people use to power and heat their homes. Chancellor Sunak headed off any such suggestion on Thursday, and in doing so absolutely established his preference for tax-and-spend, complaining that cutting taxes would be forever.
The language Sunak used was telling as well. Rather than recognising that by cutting taxes the government takes less from working people, the Chancellor spoke using the words of Big Government devotees, saying to take less money from people was actually a “subsidy”. Such language is common among the left and betrays a worldview that essentially sees all money as the government’s and what is not taken from working people a gift from the state to be appreciated.
Sunak told MPs: “I know that some in this House have argued for a VAT cut on energy. However that policy would disproportionately benefit wealthier households, there would be no guarantee that suppliers would pass on the discounts to all customers, and we should be honest with ourselves: this would become a permanent government subsidy on everyone’s bills. A permanent subsidy worth £2.5 billion every year at a time where we are trying to rebuild the public finances.”
Sunak was challenged in the House of Commons after his announcement of the giveaway — which will in part be paid for in taxes, but also with borrowing which British households will pay back in the coming years through even higher energy bills — by veteran Conservative backbencher Peter Bone, who asked the Chancellor in his usual acerbic way: “Conservatives believe in holding taxes down and putting more money in people’s pockets so they can decide how to spend it. Socialists believe in raising taxes and then choosing to give it back in the form of discounts and rebates to selected people the government thinks need it.
“Can the Chancellor tell me his approach in increasing national insurance contributions and then handing money back to different people through rebates and discounts — is that a conservative approach or a socialist approach?”
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