Prime Minister Rishi Sunak is facing a backlash within the Conservative Party as his government weighs letting welfare benefits slip to create room for tax cuts.
Sunak signaled over the weekend that he might break with the practice of increasing benefits in line with inflation after Bloomberg reported that Chancellor of the Exchequer Jeremy Hunt was considering the option.
Justice Secretary Alex Chalk suggested on Sunday he wouldn’t be comfortable with squeezing benefits to enable tax cuts. “We must do everything we can for the most disadvantaged in society,” he told Sky News. “My colleagues will want to ensure that we are decent, humane and that we support people.”
Read more: UK Weighs Curbing Benefits Rise to Give Room for Spring Tax Cuts
While energy bills have fallen and UK headline inflation is slowing, food inflation remains at a 14.9% rate. Former Prime Minister Liz Truss wanted to cut benefits in real terms last year but was forced to retreat after pressure from many senior figures who are now in Sunak’s Cabinet, including Defence Secretary Grant Shapps, Penny Mordaunt and Michael Gove.
Rising interest rates have wiped out Hunt’s headroom for tax cuts before an election next year. Many Conservative MPs argue that tax incentives are needed to give them a chance of winning as they trail Labour by 20 percentage points in polls.
The number of Britons on Universal Credit, a broad program that’s the main form of income support, reached a record 6.1 million in July. Half of households on Universal Credit have children and 38% are employed.
“Our levels of benefits are already completely inadequate and anyone who suggests cutting their value further is clearly out of touch with the reality of life in the UK right now,” said Katie Schmuecker, principal policy adviser for the Joseph Rowntree Foundation, which fights poverty.
On another front, Sunak has to deal with a report that a man who worked as a researcher on international policy in the House of Commons was arrested in March for allegedly spying for China. Sunak told broadcasters he confronted Chinese premier Li Qiang during the Group of 20 summit in India he has “significant concerns” about “interference” from Beijing.
