At a press conference in Berlin alongside Olaf Scholz, the German chancellor, he was asked whether further tax cuts were “off the table” to fund his commitments and if there were possible cuts to public services ahead.
Mr Sunak replied: “Growth is returning, inflation is coming down, energy bills are coming down, wages are rising, and we’ve been able to do all these things. We have record investment in our public services including the NHS – that’s not going to change, it’s going to continue to increase. We’ve record investment in our schools; that’s not going to change…
“Alongside that we are able to cut people’s taxes – [a] £900 tax cut for the average person in work, the state pension going up by £900. But we have made a choice, and I’m not shying away from that choice. All governing is about prioritising. I’ve decided to prioritise defence because I think that’s the right thing to do for our country.”
The Prime Minister declined to speculate on spending commitments in the Tory manifesto at the next general election, which is widely expected in the second half this year.
‘Completely funded plan’
“What I am confident about is that if you have a strong plan for the economy, as we have, and that plan is working and we stick to that plan, we will be able to continue increasing defence spending. It’s a completely funded plan,” he added.
“We’ve got a very clear idea of how to reduce the Civil Service headcount, which has grown considerably over the last few years. We can bring that back and use that to fund what I announced yesterday, and alongside that continue to invest in public services and cut people’s taxes.
“But I can only say those things because we’ve got a plan and that plan is working, and I’m prepared to make choices… Defence is a priority for me, it’s a priority for the Government and it’s the right priority for the country.”
Mr Sunak unveiled significant National Insurance cuts and reduced a number of business taxes at both the Autumn Statement and Spring Budget.
Civil Service cuts
But stealth tax rises meant the nation’s tax burden still stood at a record £786.6 billion in 2022-23. It remains on course to hit a new post-war record next year, leading to calls from Tory critics for Mr Sunak and Jeremy Hunt, his Chancellor, to go further.
The Prime Minister reiterated his plan to cut the Civil Service to pre-Brexit numbers, saving £2.9 billion.
He said his defence spending proposals were “funded, rightly, with a reduction in the Civil Service headcount back to 2019 levels”, adding: “Since then we’ve seen a very significant rise that isn’t sustainable or needed.
“The Chancellor has conducted a detailed exercise – he announced this at the end of last year. That exercise is completed and that gives us the confidence that we can release the savings needed to fund our defence plan combined with an uplift in R&D spending, which we had already budgeted for.”
Mr Sunak said the bond between the UK and Germany was “stronger than ever” amid intensifying global threats including the illegal Russian invasion of Ukraine and the Israel-Hamas war.
‘Axis of authoritarian states’
He also told European countries they would have to increase defence spending to keep the US “committed” to Nato in the future, insisting the Continent must take on more responsibility for its defence against the backdrop of Donald Trump making a second run for the White House.
“It’s clear that the world we’re living in is increasingly dangerous and I described an axis of authoritarian states which increasingly are working together to cause instability around the world in a way that damages our security at home,” Mr Sunak added.
“I think it’s right that, in light of that, we realise that we need to do more… I do believe we’ll look back at this moment in time and realise that this is an inflection point where the old paradigm is no longer the case, and we have to adjust to a new paradigm.
“Defending our democracy and democratic processes and institutions is a priority, and we won’t tolerate any activity that undermines that.
