Labor accuses the Tories of planning unfunded tax cuts

Labor has accused the Conservatives of proposing unfunded tax cuts after Jeremy Hunt suggested key manifesto promises on welfare cuts had already been announced.

The Conservative manifesto is largely funded by proposed cuts to benefits spending, which the party says are not currently part of government policy.

But last week the Chancellor wrote in a newsletter to voters that the tax cuts in the Conservative manifesto would be funded by savings from “the massive back to work program (which I announced last year in my Autumn Statement)”.

Labor hailed his comments as evidence that welfare cuts “are not new” and “the money has been spent”.

The Conservatives said Labor was in “complete denial” about the increase in benefits bills and insisted that the savings they intend to use to fund tax cuts will come from the new policy.

Government spending on health and pensions has increased by £20 billion in real terms since 2019, with a further increase of £11 billion forecast over the next five years, making this a significant political challenge for whichever party wins the general election.

This is particularly significant for the Conservative Party as it has said it will cut £12 billion a year of government spending on benefits by 2029 compared to forecast levels.

These savings represent about two-thirds of the money used to finance manifestos of tax cuts and increased defense spending.

However, if these policies are already included in government plans, as Labor claims, the savings will be much smaller and will not be able to finance tax cuts.

Hunt, who admitted he faces an uphill battle on July 4 in his constituencies of Godalming and Ash, writes a newsletter to voters twice a week.

At the beginning of the campaign, he told audiences: “I write them myself, so what you read will be my own views.”

Photo Title, Hunt writes a regular newsletter for voters

In Thursday’s edition, two days after Rishi Sunak announced the Conservative manifesto, the chancellor wrote: “Our biggest (economic) problem is that too many people are left out of work on benefits after the pandemic when it would be much better for them, for the economy and for taxpayers if they returned to work.

“So we are funding a massive return to work program (which I announced last year in the fall statement).”

He continued that if the Conservatives win the election, they will “use the savings” to fund a 2p cut in workers’ National Insurance contributions and the abolition of National Insurance for the self-employed, the flagship measures of Sunak’s manifesto.

Labor argues that this passage is actually an admission by Hunt that parts of the Conservative plans are already government policy, meaning they are already included in government budgets and spending plans.

They say this means savings will be less than £12 billion and as a result tax cuts will be “unfunded”.

Darren Jones, shadow chief secretary to the Treasury, said: “It is Jeremy Hunt’s private admission that the Conservatives’ welfare cuts are nothing new, that the money has been spent and therefore their plans are unfunded, that motivates the carriage and the party wastes his manifesto, which is no longer worth the paper it was written on.

“Rishi Sunak lied about Labour’s plans and now we have proof he is lying about his own – from his Chancellor.

“It is high time for Sunak to come clean and admit that his manifesto is a desperate wish list of unfounded promises that risk crashing the economy.”

The Conservatives insist that their measures to reduce social spending have been announced since Hunt’s autumn statement last November, or will be announced in the future.

Their claims of social savings were also questioned by an independent think tank from the Institute for Fiscal Studies (IFS), which said it was “unclear” whether they could save the required amount.

The IFS said this was because “many of the policies they plan to set out in their manifesto have been previously announced by the government and are therefore already included” in government budgets.

Much of the Conservatives’ drive to save under the Welfare Bill would come from stemming the surge in claims for disability benefits, primarily Personal Independence Allowance (PIP).

The number of applicants has increased from 2.3 million in 2019 to 3.6 million today and is projected to increase to 4.6 million within five years of the election.

In April, the government launched consultations on ways to reform PIP.

Paul Johnson, director of the IFS, said the spending cuts required by the Conservative plans “will not be easy and will require specific, clear policies that require difficult decisions” and have not yet been announced.

But he added: “I was equally skeptical of the promises to deliver £12 billion of social savings in the 2015 manifesto.

“Thanks to several major cuts, including a four-year freeze, these savings have been largely achieved, albeit two years later than anticipated in the manifesto.”

A Conservative spokesman said: “Unless action is taken, working-age welfare bills will rise by more than £20 billion a year by the end of the decade.

“Labour completely denies this and doesn’t think a penny can be saved from this unsustainable growth.

“We don’t think that’s the right thing to do, so we’ve set out how we’ll save £12 billion from the Social Care Act by the end of the next parliament, including by controlling spending on health and pensions and taking people’s benefits away after 12 months if they don’t they will accept the job.”