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Johnson and Sunak Try to Reassure U.K. Tories Over Tax ‘Horror’

Published 09/02/2020, 02:37 PM
Updated 09/02/2020, 04:09 PM
© Reuters.  Johnson and Sunak Try to Reassure U.K. Tories Over Tax ‘Horror’

(Bloomberg) -- U.K. Prime Minister Boris Johnson sought to win back the trust of his own colleagues after weeks of criticism and policy reversals left his coronavirus strategy in disarray.

As lawmakers returned to Westminster after the summer break, the premier appealed directly to Conservative members of Parliament to help persuade the public to go to work and get the economy back to normal.

Chancellor of the Exchequer Rishi Sunak promised Tories there would be no “horror show” of tax rises, but left himself room for temporary hikes to pay off the pandemic debts in the future.

Together, Johnson and Sunak -- the double act at the top of the British government -- spent much of Wednesday in a series of face-to-face meetings with Tories who have been anxious about their handling of the virus crisis. Many Conservatives are worried that potential tax rises will stifle an economy that’s already deep in recession.

Yet even as the prime minister set about trying to regain the initiative, his government announced yet another policy U-turn, this time on plans to ease lockdown restrictions in parts of northwestern England.

Johnson Retreats Again, Leaving U.K. Virus Plan in Disarray

In recent weeks, Johnson’s team has reversed policies on issues including school exam grading, the wearing of face coverings in shops and in schools, its contact-tracing program to contain the spread of the virus.

The latest reversal is a blow to the credibility of Johnson’s broader pandemic strategy and will add to the impression that his government is not in control as he seeks desperately to revive the stalled economy and get the public back to work.

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In a private meeting inside Parliament, Johnson told MPs that as community leaders, they should urge their constituents to return to workplaces as soon as possible so the country can get moving again, two people present at the meeting said.

Earlier in the day, Sunak promised there won’t be “a horror show of tax rises with no end in sight,” after Tory colleagues warned that hiking taxes would stifle the already ailing economy.

Sunak’s careful wording suggested he’s not ruling out temporary tax increases to pay off the vast debts racked up during the pandemic, but is still committed to the party’s goal of maintaining a low-tax economy in the longer run.

“We will need to do some difficult things,” Sunak told MPs. He said the Tory party needs to “be honest” with the British public about “the challenges we face,” while “showing them how we plan to correct our public finances and give our country the dynamic, low tax economy we all want to see.”

The cost of responding to the pandemic has sent the U.K.’s national debt to more than 2 trillion pounds ($2.7 trillion) for the first time in history.

©2020 Bloomberg L.P.

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