Tory manifesto will include tax cuts, says PM

The Conservative manifesto will include tax cuts, Rishi Sunak has told the BBC in an interview to be broadcast later.

The prime minister said: "We're going to keep cutting people's taxes. You'll see that in our manifesto tomorrow."

Challenged over how he would fund his policies, Mr Sunak said they would all be "fully funded and costed".

He insisted day-to-day government spending on public services would continue to increase ahead of inflation under a future Tory government.

But when pressed over whether certain departments would see cuts, he acknowledged "all government's prioritise within that".

In the spring Budget, the government announced a 2p tax cut to National Insurance for 27 million workers - matching another reduction set out in last year's Autumn Statement.

The Conservatives have also said they want to abolish National Insurance completely in the long-term, when it is deemed affordable to do so.

The party's manifesto, which is being launched on Tuesday and will outline what it plans to do if it wins the election, is expected to include a pledge to scrap stamp duty for first-time buyers of properties costing up to £425,000.

However, it is not thought to include anything on inheritance tax.

Asked if the Tory manifesto would promise more tax cuts, Mr Sunak said he wanted to build on the tax cuts "we have already started to deliver".

Both the Tories and Labour have ruled out any increase to the rate of income tax, National Insurance or VAT.

However, both parties have also said income tax thresholds will remain frozen until 2028.

This means millions of people will be pulled into a higher tax band if their wages increase.

Mr Sunak said he had to make "difficult decisions" as the government had provided "an enormous amount of support" to people during the Covid pandemic and energy crisis.

However, he insisted taxes were now being cut.

Mr Sunak said his party's policies would be paid for by clamping down on tax avoidance, which he said would raise £6bn, as well as reforming the welfare system and getting more people into work.

However, the independent Institute for Fiscal Studies has said delivering the £12bn savings promised by the Tories by 2030 through reforming welfare "looks difficult to the extreme".

The think-tank has also warned whoever wins the next election will have to cut the scope of what the state provides or increase taxes to maintain levels of departmental spending.

Asked if he would be honest with people that his plans would also mean significant spending cuts for many government departments, the prime minister said: "No, that's not what our plans show."

He said day-to-day spending on public services under a future Tory government would continue to increase ahead of inflation.

But he added: "Of course, all governments prioritise within that."

Mr Sunak said he also wanted to focus on productivity in the public sector, which he said had fallen "considerably since Covid".

"If we recover just to pre-Covid levels of productivity, so nothing heroic, just as productive as we were before the pandemic hit… that productivity gain is worth £20bn," he said.

He added that this would make it possible to cut taxes.