Labour has questioned Rishi Sunak’s attempt to portray himself as a low taxation Conservative as both parties stake their claims to being the most trusted on the economy.
The chancellor and Labour leader Keir Starmer will on Tuesday both deliver speeches that make their cases to be the next prime minister.
Sunak, seen as the most likely Tory to succeed Boris Johnson if the PM is brought down by the partygate scandal, will insist he wants to create a “lower tax economy” in an appeal to traditional Conservatives.
Meanwhile, Starmer will evoke the spirit of former Labour prime minister Harold Wilson by promising the “white heat” of a new technological revolution will deliver prosperity for all.
But in an attempt to thwart Sunak’s ambitions, Labour will claim the chancellor has slapped 15 tax rises on households and businesses in the last two years – and that he has raised the most tax on average per budget than any chancellor in the last 50 years.
Amid the cost of living crisis, the chancellor and the prime minister have been refusing to back down on the 1.25 percentage point hike to National Insurance for April despite pressure from numerous Tory MPs.
Delivering a lecture to the Bayes Business School in London, Sunak is to insist he will make “difficult and often unpopular arguments” on spending, hinting at his determination to resist calls from cabinet colleagues for fresh money.
He will argue that cutting taxation in the future needs to be done in a “responsible way”, following a row with health secretary Sajid Javid over funding the “living with Covid” plan.
Sunak is expected to say: “I firmly believe in lower taxes.
“The marginal pound our country produces is far better spent by individuals and businesses than government.
“I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long term challenges,” he is due to add.
But in comments that will be seen as a challenge to ministers demanding increased spending, he is expected to say: “Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere.”
He will also say that he is “disheartened” when he hears the “flippant claim” that tax cuts always pay for themselves, adding: “They do not.”
In response, shadow chancellor Rachel Reeves used the speech to brand the Conservatives the party of “high tax” as a result of being “the party of low growth”.
“Over a decade of Tory government, the economy has grown far slower than when Labour was in power, and it is set to go even slower in the coming years,” she said, citing research suggesting the £27.3bn raised by Sunak per year is higher than that brought in by 12 Tory and Labour predecessors at the Treasury since 1970.
Elsewhere, Starmer will promise to build a “new economy of security” as he borrows from Wilson’s 1963 pledge to harness “the white heat of technological change”. At the time, Wilson was seeking to become the first Labour prime minister for more than a decade.
Speaking in Wilson’s home town of Huddersfield in West Yorkshire, Starmer will say that after 12 years of a Conservative government, it will fall to Labour to deal with the next generation of change.
“Our country and our economy are entirely different now, but we too are going through the white heat,” he is expected to say.
“We face our own revolutions in technology and industry, and it will fall to the next Labour government to shape that change so it works for all.”
It marks the latest stage of his effort to restore the party’s economic credibility in the eyes of voters following the controversy over Jeremy Corbyn’s plans.
Starmer will declare his determination to end the “economic fatalism” of the Tories, who he will accuse of lacking a clear plan for business.
“Britain cannot rise to the great challenges of the day without the innovation of business,” he will say.
“A political party without a clear plan for making sure businesses are successful and growing … which doesn’t want them to do well and make a profit … has no hope of being a successful government.”
He will argue that if the Tories had matched Labour’s record on growth, people would have enjoyed higher incomes while an additional £30 billion a year would have been available for public services without raising taxes.
“We will build a new economy of security, where stable employment will be the bedrock of a better future for the next generation,” he will say.
“We will build an economy of prosperity, in which the places that once powered Britain flourish again. We will build a new economy of respect, where the contribution of every worker and employee is given its due.”