Sunak says he 'firmly believes in lower taxes' despite national insurance hike

Chancellor Rishi Sunak has said that he “firmly believes in lower taxes” despite a pending national insurance hike set to come into effect in April.

Speaking at the Bayes Business School, formerly known as Cass Business School, on Thursday, he pledged to deliver a low tax, higher growth economy.

It comes as the finance minister has faced criticism from MPs over rises to national insurance, as a bid to help fund health and social care, as the country already faces a cost-of-living squeeze and soaring inflation.

The rise from 1 April means employees, employers and the self-employed will pay 1.25p more for every pound. An employee earning £20,000 a year will pay an extra £89 in tax, while someone on £50,000 will pay £464 more.

As well as the NI hike, there will be a tax rise on businesses next year which will push the overall level of tax to around 35.5% of GDP by the end of the parliament. This is the highest level since 1948.

Read more: Delay national insurance hike, firms urge

"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 said at his first major speech at the annual Mais lecture. "I firmly believe in lower taxes."

He added: “‘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.

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

The speech was attended by senior practitioners and academics. Since its inception in 1978, the Mais lecture has maintained a tradition of prestigious speakers including Mark Carney, Tony Blair, Gordon Brown, Mervyn King and George Osborne.

Read more: UK facing worst cost of living crisis in 60 years

However, it was scrunitised by the Labour party, which called the Conservative party the “party of high tax”.

"The chancellor may say he 'believes' in low taxes in his lecture – but the hard facts are that Sunak has hit households and business with 15 tax rises in two years in post – with an unfair National Insurance rise down the line – and he has raised the most tax on average per budget than any chancellor in the last 50 years," shadow chancellor Rachel Reeves said.

“If the Tories had matched Labour’s record on growth in government, businesses would have grown faster and people would have had higher incomes, boosting the public finances.

“It is because the Conservatives are the party of low growth, that they are now the party of high tax.”

Labour party leader Sir Keir Starmer was also set to deliver a speech in Huddersfield, however, it was cancelled due to the Ukraine-Russia geopolitical crisis.

Watch: Raising National Insurance in April is ‘wrong thing to do’, says Starmer