Sunak channels Thatcher with pledge for low tax Britain

Rishi Sunak will position himself as a Thatcherite chancellor on Thursday, setting out his vision for lower taxes, budgetary responsibility and a greater emphasis on the private sector to underpin improved economic performance for the UK.

Having been a chancellor that has so far raised taxes, overseen the largest peacetime budget deficits and accepted prime minister Boris Johnson’s willingness to intervene in the economy, Sunak will give a lunchtime speech setting out his ambition for a radically different Conservative economic policy.

The chancellor will outline his plans in the Mais lecture, delivered every year by a prominent figure in economics or finance, and will reprise his theme from October’s Budget that he aspires to lower taxes in the UK, in a speech that will appeal to the traditional right of the Tory party.

“The most powerful case for the dynamic market economy is that it brings economic freedom and prosperity. And the best expression of that freedom is for all of us to be able to make decisions about how to save, invest or use the money we earn,” he will say.

“The marginal pound our country produces is far better spent by individuals and businesses than government.”

Capital. People. Ideas. Three priorities to deliver higher productivity, tied with one golden thread: that what government does is far less important than creating the conditions for private businesses and individuals to thrive.

Sunak’s promise to be a “tax cutting” chancellor is an attempt to reassure rightwing Conservative MPs who have grown alarmed by the overall tax burden rising to its highest level since the 1950s during the coronavirus pandemic.

But he is clear that it is a difficult process and his speech will make reference to Thatcher and Nigel Lawson, her chancellor, who believed that tax cuts could only be delivered once the public finances were in order.

The chancellor has become exasperated by critics who claim that “tax cuts will always pay for themselves”; his aides say the remark was aimed at Labour, but it will also be seen as a rebuke to those on the Tory right who make that argument.

Alongside lower taxes, Sunak will pin his colours to other Thatcherite ideals, and will call for less government intervention to foster enterprise, innovation, higher productivity and living standards.

“Capital. People. Ideas. Three priorities to deliver higher productivity, tied with one golden thread: that what government does is far less important than creating the conditions for private businesses and individuals to thrive,” he will say.

When Johnson finally steps down — or is removed — from office, Sunak will be seen as a frontrunner to succeed him, and the speech will serve as a foretaste of how he would like to manage economic policy differently from the prime minister’s interventionist instincts.

But he will face a challenge from self-proclaimed Tory tax-cutters, like foreign secretary Liz Truss, who are not personally associated with the higher taxes necessitated by the Covid crisis.

With Truss also laying claim to the Thatcherite legacy, Sunak’s association with the Iron Lady’s economic policies suggest the next Tory leadership contest could have more than a whiff of nostalgia.

The Mais lecture will be delivered at lunchtime to an audience at the Bayes business school, formerly known as Cass Business School.