A Tory MP has warned that there will be tax rises and “higher interest rates” should Labour win the next general election.
Labour has previously pledged to invest £28 billion every year until 2030 in green projects, should they win the general election in 2024.
The Chancellor Jeremy Hunt then explained the impact of Labour’s pledge, saying that it is a “backdoor tax” for families who have mortgages.
Conservative MP Louie French said in the House of Commons that he welcomes Hunt’s tax pledges, he asked the Chancelor, “(I) hope to see more announced soon – especially a rise in the higher rate threshold.
“But, as the Conservatives look to reduce the tax burden on working people, does the Chancellor share my concerns that a £28 billion-a-year unfunded spending commitment will likely see taxes rise and lead to higher interest rates if Labour were ever in government?”
The Chancellor told MPs, “It’s not just me… Paul Johnson, of the Institute for Fiscal Studies (IFS), when talking about Labour’s plans, said additional borrowing drives up interest rates – which is of course a backdoor tax rise on families with mortgages.
“But as it’s Christmas, perhaps I could explain it this way: if Santa borrowed £28 billion, he might have more toys to give out this year, but he’d also have debt interest to pay and fewer toys to give out next year.”
Last month the IFS said that the Chancellor’s “substantial tax cuts” set out in the autumn statement are to be “paid for by planned real cuts in public service spending.”