Business taxes should be cut before personal taxes, Jeremy Hunt has said, but any spare money will be used to reduce the size of the national debt first.
The Chancellor said the Government was “not in a position to have that discussion” as he warned that tax cuts would be “absolutely crazy” while inflation is running so high.
Speaking at a Centre for Policy Studies event at the Conservative Party conference, Mr Hunt was asked what he would do with £5 billion if he was told to spend it on tax cuts.
He said: “If I was putting on my finance minister hat, my first priority would be business tax cuts because the job of a Conservative government is to make the economy competitive, to make money for all the things we care about for our public services and so on.
“Obviously, in the run-up to an election, I would love to do a tax cut that ordinary people felt to show people our values and that we believe money is better when it stays in people’s pockets than when the state takes it away.
“At the moment, we’re not in a position to have that conversation or even have that ‘what if’ scenario in our minds because any tax cut would be inflationary and we are midway through a journey to bring the inflation rate down. It would be absolutely crazy to give people money with tax cuts and then just see all that money taken away by inflation going back up.”
The national debt currently stands at £2.5 trillion, and servicing the debt is costing the country £110 billion a year – more than 10 per cent of total public spending and a bigger bill than for anything other than the NHS and welfare.
Mr Hunt said: “The reason why talking about tax cuts this autumn is slightly academic is ... also because our debt interest payments have gone up so much in the last six months that I think it’s incredibly unlikely we would have any headroom to do anything like that.”
Asked whether he had a figure in mind for how much the debt would need to come down before he would consider tax cuts, the Chancellor said: “We have fiscal rules which require me at budgets and autumn statements to be putting the country on a path towards reducing debt.”
He also revived the idea of a “Britcoin” cryptocurrency issued by the Bank of England – a suggestion first floated by Rishi Sunak when he was chancellor.
Mr Hunt said: “It’s something the Governor of the Bank of England and myself are thinking through. My instinct is that we will probably need to have a central bank digital currency, but we have to structure it in such a way that it doesn’t crowd out everyone else [in the crypto market].”