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Sunak pledges £17 bn tax cuts by 2030

Prime Minister Rishi Sunak and his wife Akshata Murty visit the British Normandy Memorial near Gold Beach, alongside Military veterans, the President of France Emmanuel Macron, and King Charles III to mark the D-Day 80th anniversary in France. Picture by Simon Dawson / No 10 Downing Street

Opponents said Sunak was making unrealistic and unaffordable promises in a desperate bid to stave off defeat…reports Asian Lite News

Prime Minister Rishi Sunak on Tuesday implored British voters, and his own party, to throw him a lifeline in the UK’s election, pledging to cut taxes and reduce immigration if his Conservative Party is reelected on July 4.

With the Conservatives trailing Labour Party in opinion polls, Sunak acknowledged that “people are frustrated with our party and frustrated with me.” But he argued that the Conservatives are “the only party with the big ideas to make this country a better place to live.”

Opponents said Sunak was making unrealistic and unaffordable promises in a desperate bid to stave off defeat.

Tuesday’s launch of the Tories’ manifesto, its main package of pledges, came a day after Sunak was forced to deny rumors he could quit even before polling day as the Conservatives are alarmed over his lackluster campaign.

Sunak insisted he had not considered resigning and said he was “not going to stop fighting for people’s votes.”

On July 4, British voters will elect lawmakers to fill all 650 seats in the House of Commons, and the leader of the party that can command a majority — either alone or in coalition — will become prime minister.

Sunak held the manifesto launch at Silverstone motor racing circuit in central England, home of the British Grand Prix, and it could be one of his last big chances to get his spluttering campaign back on track.

His central pitch was the claim that a government led by Labour’s Keir Starmer would raise taxes, while a Conservative one would lower them.

In its manifesto the party pledged 17 billion pounds ($22 billion) in tax cuts by 2030, to be paid for largely by slashing welfare costs. The main tax cut is a 2 percentage point reduction in National Insurance, a tax employees pay to qualify for a state pension. The Conservative government has already cut it twice, from 12% to the current 8%.

Sunak said the Conservatives would pay for lower taxes by “controlling the unsustainable rise in working-age welfare that has taken off since the pandemic.”

The Labour Party argues that the tax burden has risen to its highest level in decades during 14 years of Tory rule. Labour campaign chairman Pat McFadden called the Conservative manifesto “the most expensive panic attack in history.”

Paul Johnson, director of independent think tank the Institute for Fiscal Studies, said he had “a degree of skepticism” about the math behind the Conservative promises.

“Those are definite giveaways paid for by uncertain, unspecific and apparently victimless savings,” he said.

Sunak’s surprise decision to call a summer election, several months earlier than most people expected, was intended partly to catch the opposition unprepared.

But it’s the Conservatives who have seemed off-balance from the moment Sunak stood outside 10 Downing St. in the rain on May 22 to announce the start of the campaign.

The Conservatives were already on the defensive after jettisoning two prime ministers without an election in quick succession in 2022: first Boris Johnson, felled by scandals, then Liz Truss, who rocked the economy with drastic tax-slashing plans and lasted just seven weeks in office.

The party’s prospects worsened last week when populist firebrand Nigel Farage announced that he would run for Parliament at the helm of the right-wing party Reform U.K., vowing to be a “bloody nuisance” to the established parties.

Farage has been traversing the country seeking to rally support with his anti-establishment and anti-immigration rhetoric. On Tuesday a 28-year-old man was arrested after Farage was pelted with objects from a construction site as he rode in an open-topped bus in Barnsley, northern England.

Last week Farage was doused with a milkshake after a campaign appearance.

Sunak stumbled again last week when he flew home early from commemorations in France of the 80th anniversary of D-Day so he could resume campaigning. The photos of centenarian World War II veterans and an array of world leaders including U.S. President Joe Biden attending the solemn ceremony on Omaha Beach without him were a publicity nightmare.

Sunak quickly realized his error and apologized.

Paul Goodman, a former Conservative lawmaker who is now a member of the House of Lords, said the irony is that apart from the D-Day gaffe, “the Conservatives have run a perfectly decent, conventional campaign,” but have little to show for it.

“They’ve launched lots of policies, they’ve had some hits on Labour,” he said. “Rishi Sunak actually did pretty well in the debate (against Starmer) last week. … All of this appears to have made no difference at all.”

Sunak said the Conservatives would halve net immigration from its current level of about 700,000 people a year and would push on with a controversial plan to send some asylum-seekers who reach Britain by boat across the English Channel on a one-way trip to Rwanda.

Sunak said that if he won the election there would be a “relentless continual process of permanently removing illegal migrants to Rwanda” with the first flights taking off in July.

ALSO READ-Tory manifesto will include tax cuts, says Sunak

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Tory manifesto will include tax cuts, says Sunak

The Conservatives have also said they want to abolish National Insurance completely in the long term, when it is deemed affordable to do so…reports Asian Lite News

The Conservative manifesto will include tax cuts, Rishi Sunak has said. 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, 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 governments 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, 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.

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.”

Sunak said he also wanted to focus on productivity in the public sector, which he said had fallen “considerably since Covid”. He added that increasing productivity to pre-pandemic levels would save £20bn and would make it possible to cut taxes.

Sunak was also challenged over his party’s record on housing. Asking if having your own home had got harder under a Tory government, the prime minister said: “It has got harder – and I want to make sure that it’s easier.

“And what we will do is not just build homes in the right places and do that in a way that is sensitive to local communities, but make sure that we support young people into great jobs so they can save for that deposit.” He added that “saddling young people with higher taxes” would make it harder for them to save for a deposit to buy a house and he wanted people to “keep more of their money”.

One recent report by the Building Societies Association found first-time buyers were facing the toughest conditions in which to buy a house in 70 years. It suggested home ownership among younger people has been in decline over the last 20 years.

Mortgage rates are relatively high compared with the last decade, and the cost of renting has also soared, making it harder for people to save. This means first-time buyers face the double challenge of raising enough for a deposit as well as being able to afford a mortgage.

ALSO READ-Labour rejects Tory’s National Service plan

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Hunt vows tax cut if Tories win polls

The chancellor argued that a Tory promise to cut taxes will be a major dividing line at the election, even though the overall tax load has risen to postwar highs under his party…reports Asian Lite News

Jeremy Hunt defended large-scale Conservative tax rises during this parliament, but insist that only his party will cut the tax burden if it wins the next general election.

The chancellor argued that a Tory promise to cut taxes will be a major dividing line at the election, even though the overall tax load has risen to postwar highs under his party.

“Labour like to criticise tax rises this parliament thinking people don’t know why they have gone up — the furlough scheme, the energy price guarantee and billions of pounds of cost of living support,” Hunt said.

Hunt’s speech in central London comes ahead of the release next week of official inflation data that the chancellor hopes will show inflation falling below the Bank of England’s 2 per cent target.

He sees this as a key moment for the economy. The Tories are trailing Labour by 20 percentage points in opinion polls and have worse ratings on the economy than Sir Keir Starmer’s party.

Hunt’s speech marks the opening skirmishes between the two main parties on the economy ahead of an election expected this autumn. On Thursday, Labour said creating “economic stability” would be its first priority if it wins.

The chancellor will claim Labour attacks on his party’s tax-raising record were “playground politics”, noting Starmer’s party had supported policies to help the UK through a series of economic shocks.

Despite recent cuts to national insurance, the Institute for Fiscal Studies think-tank has said “this remains a parliament of record tax rises”.

Meanwhile, Hunt on Thursday convened technology groups and regulators in an attempt to identify ways of making the country more attractive to the high-growth industry.

He hosted a summit at his grace-and-favour Dorneywood estate in Buckinghamshire to canvas executives’ views on what the government could do to retain tech groups in the UK and help them to grow.

One person at the summit said it was “very positive” and that a number of people stated they were planning to have initial public offerings in London.

However, the Treasury declined to say how many companies attended the event or provide names.

Some major companies — including Revolut, Klarna, Checkout.com and ClearScore — did not attend. The chief executive of one large tech group said he had not known the Dorneywood summit was being held.

Industry figures attending included Monzo boss TS Anil and Eben Upton, chief executive of Raspberry Pi, the computer maker on which hopes for a reopening of the London IPO market are pinned.

The Cambridge-based company said on Wednesday that it would seek a listing on the London Stock Exchange’s main market. It was valued at $597mn in November. 

The Treasury said the summit “focused on the offer that the UK has for innovative firms wanting to raise capital in the UK”.

One person at the meeting said tech bosses had challenged Nikhil Rathi, boss of the Financial Conduct Authority, to provide “clarity and certainty” on future regulation and to take a more “pro-growth” approach.

The UK has a record of developing more start-ups than other European countries but Hunt is attempting to overhaul London’s stock market rules to encourage more companies to grow and list in the country.

Sunak vows to remain an MP even if Tories lose election

Prime Minister Rishi Sunak has vowed to stay on as an MP even if his ruling Conservative Party loses the next general election.

The PM said his North Yorkshire constituency is “wonderful” and “of course” he will remain in Parliament whatever the outcome when he goes to the country.

There has been speculation that Sunak, who previously worked at a hedge fund in California, could be eyeing a job in Silicon Valley as the Tories trail by more than 20 points in opinion polls.

But asked on ITV’s Loose Women whether he would stay on as an MP if the party loses, the MP for Richmond (Yorks) said: “Of course I’m staying. I love being an MP. I love my constituents, I love my home in North Yorkshire.”

Elsewhere in the show, which Sunak claimed was “one of the more intimidating things” he had done over the course of his job, Sunak conceded that “we’re not there yet” in terms of the progress he wants to make before calling an election.

He has dismissed demands for a change of political course after the Tories suffered a drubbing in the local elections earlier this month, saying he is “determined more than ever to show the public that what we’re doing is making a difference” on issues including the economy and migration.

“I’ll happily come back and talk to you during the election. But I am focused on that, I am focused on the choice of that election,” he told the panel.

“We’ve been through a lot but I do think actually the things we are doing are starting to make a difference. We’re not there yet, of course”.

ALSO READ-Tories will commit to pensions triple lock, says Hunt

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IMF warns Hunt against tax cuts

The IMF said it was forecasting UK growth of 0.5% in 2023 and 0.6% in 2024 – both unchanged from October – and with only Germany of the leading G7 industrialised economies expanding more weakly…reports Asian Lite News

The International Monetary Fund has issued a strong warning to Jeremy Hunt against cutting taxes in his budget in March, stressing the need to boost key areas of public spending instead.

In updated forecasts for the UK and the rest of the global economy, the Washington-based fund doubted whether the widely anticipated tax cuts would be possible without extra borrowing or post-election spending cuts.

The IMF said the chancellor should be focusing on repairing the public finances after the damage caused by the pandemic and the war in Ukraine in order to meet growing spending pressures.

An IMF spokesperson said: “Preserving high-quality public services and undertaking critical public investments to boost growth and achieve the net zero targets, will imply higher spending needs over the medium term than are currently reflected in the government’s budget plans.

“Accommodating these needs, while assuredly stabilising the debt/GDP ratio, will already require generating additional high-quality fiscal savings, including on the tax side.”

Hunt is expected to cut income tax in the budget, but the IMF called on the chancellor to increase carbon and property taxes, take steps to eliminate loopholes in the taxation of wealth and income, and overhaul the pensions triple lock. “It is in this context that [IMF] staff advises against further tax cuts,” the IMF said.

Hunt rejected the IMF’s call. “The IMF expect growth to strengthen over the next few years, supported by our introduction of the biggest capital investment tax reliefs anywhere in the world, alongside national insurance cuts to improve work incentives,” the chancellor said.

“It is too early to know whether further reductions in tax will be affordable in the budget, but we continue to believe that smart tax reductions can make a big difference in boosting growth.”

The IMF said it was forecasting UK growth of 0.5% in 2023 and 0.6% in 2024 – both unchanged from October – and with only Germany of the leading G7 industrialised economies expanding more weakly.

With lower inflation likely to boost consumer spending power, the IMF said it was pencilling in UK growth of 1.6% in 2025 – slower than forecast three months ago. “The markdown to growth in 2025 of 0.4 percentage points reflects reduced scope for growth to catch up in light of recent upward statistical revisions to the level of output through the pandemic period,” the IMF said.

Last year, the Office for National Statistics revised up its estimates of UK growth in 2020 and 2021 by 1.8 points in total across the two years.

The IMF said the global economy was gliding towards a “soft landing” after coping with the impact of tough central bank interest-rate action to reduce inflation.

Revising up its growth estimates for 2024, the IMF said a number of big economies – including the US, China, Russia and India – had posted stronger than expected performances in 2023 and it was surprised by the resilience shown.

ALSO READ-IMF upgrades 2024 global growth forecast to 3.1%

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Hunt Signals Further Tax Cuts

Chancellor Jeremy Hunt aims to attract more investment to Britain during his Davos visit, emphasising the significance of lower taxes for economic growth…reports Asian Lite News

UK Chancellor Jeremy Hunt has hinted at an inclination to reduce taxes in the upcoming spring budget. Speaking to the BBC at the World Economic Forum in Davos, Switzerland, Hunt emphasised the positive correlation between lower taxes and dynamic, faster-growing economies. In the previous autumn statement, he had already reduced national insurance for workers by 2% and announced tax relief for businesses.

The chancellor expressed the possibility of further tax cuts if inflation decreases this year, coupled with lower interest rates, providing fiscal headroom. Hunt aims to attract more investment to Britain during his Davos visit, emphasising the significance of lower taxes for economic growth.

Observing the direction of economic growth in North America and Asia, Hunt believes that low-tax economies are more competitive and generate increased revenue for public services like the NHS. While not providing specific details on the scale of potential tax cuts, he awaits an assessment from the Office for Budget Responsibility (OBR).

The focus of the budget on March 6 is expected to be on income tax, as the overall tax burden is set to rise to its highest level in decades. Frozen tax thresholds since 2021, remaining unchanged until 2028, contribute to households being pushed into higher income tax brackets. Typically, tax thresholds rise with inflation, but the current freeze has sparked anticipation for adjustments in the upcoming budget.

Inflation Rose in December

The UK’s consumer price index (CPI) rose by 4 per cent in the 12 months to December 2023, up from 3.9 per cent in November, according to official data. This was the first inflation increase since February 2023, said the Office for National Statistics (ONS).

Meanwhile, Chancellor Hunt said he was “confident” that inflation will continue to fall and that prices were “heading in the right direction”. He told reporters on Thursday: “I think it’s coming down. I think it will continue to fall.”

The ONS said that CPI rose by 0.4 per cent monthly in December, reports Xinhua news agency. “The rate of inflation ticked up a little in December, with rises in tobacco prices due to recently introduced duty increases,” said Grant Fitzner, chief economist of the ONS. Prices in the alcohol and tobacco division rose by 12.8 pe cent in the year to December.

As announced in Autumn Statement 2023 in November, duty rates on tobacco products increased by retail price index (RPI) inflation plus 2 per cent, with duties on hand-rolling tobacco products increasing by RPI inflation plus 12 per cent.

The tobacco price rises “were offset partially by falling food inflation, where prices still rose but at a much lower rate than this time last year”, said Fitzner. “Meanwhile, the prices of goods leaving factories are little changed over the last few months, while the costs of raw materials remain lower than a year ago,” he added.

According to the ONS, food and non-alcoholic beverage prices rose by 8 per cent in December year-on-year, the lowest growth rate since April 2022. The latest data, significantly down from a peak of 11.1 per cent in October 2022, is still double the central bank’s 2 per cent target.

Economists are expecting the Bank of England to cut interest rate, which currently stands at a 15-year high of 5.25 per cent, at around the middle of this year.

However, the UK teeters on the edge of recession, evident in recent official growth figures revealing a contraction in the economy from July to September. A recession, commonly defined by two consecutive quarters of declining GDP, looms on the horizon.

Despite the economic challenges, Chancellor Hunt remains cautiously optimistic. While asserting that it’s premature to determine the scope of potential tax cuts, he pointed to the swift decline in inflation as a positive indicator for Britain’s improving economic outlook.

ALSO READ-Sunak rebuked by stats watchdog over asylum backlog claim

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Tax cuts unlikely before election, says Hunt

Hunt’s comments will concern Tory MPs, who have been pushing for tax cuts in the autumn statement in the run-up to next year’s general election…reports Asian Lite News

Jeremy Hunt has said he must “double down” on high prices after admitting a package of pre-election tax cuts this autumn was looking unlikely.

The government would not make moves to “pump billions of additional demand” into the economy, the chancellor added.

The prime minister had previously pledged to halve inflation to about 5% by the end of the year but it has remained at 8.7%.

In an interview with the Financial Times, Hunt said achieving Rishi Sunak’s promise was “going to be more challenging than we thought”.

“We will not countenance tax cuts if they make the battle against inflation harder,” he said. “If we were to pump billions of pounds of additional demand into the economy when inflation is already too high, that would mean fiscal policy working against monetary policy.”

Hunt’s comments will concern Tory MPs, who have been pushing for tax cuts in the autumn statement in the run-up to next year’s general election.

The chancellor was speaking before his annual speech to the City of London on Monday, during which he will announce measures he hopes will grow the economy by making UK stock markets more appealing to firms seeking to float their businesses.

During the speech, he will also set out proposals to simplify rules for buying and selling shares and deliver higher returns for investors, as well as announcing a vision for a new kind of stock exchange allowing private companies to access markets without floating.

Hunt said: “These commonsense changes are grasping our newfound Brexit freedoms to simplify the rulebook – making it easier than ever for firms to research, raise funds, and float their business.”

The chancellor also said the government could resist “inflationary” public sector pay demands, while applying new pressure to companies, saying they ought to hold down prices and had “moral responsibilities to their own customers in a cost of living crisis”.

He said: “There are times when margin rebuild is legitimate and there are times when you need to think about the impact on your own customers.”

Cabinet ministers have been pushing Sunak to accept a 6% public sector pay rise recommended by the independent pay review bodies, the Times reported.

It is understood that the education secretary, Gillian Keegan, health secretary, Steve Barclay, defence secretary, Ben Wallace, justice secretary, Alex Chalk, and home secretary, Suella Braverman, are among the high-profile ministers lobbying Sunak.

Earlier this year the chancellor came under pressure from Conservative backbench MPs to unveil a raft of tax-cutting measures.

“We can’t wait until the next general election, people are depressed, we’ve got to give them hope,” said the backbencher Edward Leigh. “Corporation, personal, fuel tax – you’ve got to give them something.”

Another MP was reported to have told Hunt the Conservative party would face a “fin de siècle” – the end of an era – in government if people did not feel they had more disposable income.

The Tories continue to trail Labour in the polls, with recent modelling based on a mega-poll of new constituency boundaries suggesting Keir Starmer’s party are on course to secure a 140-seat majority in the next election.

With the Conservatives still suffering from a large polling deficit, Labour’s support was found to be at about 35% – 12% ahead of Sunak’s party.

ALSO READ-Sunak wants 2% tax cut before polls

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Germany concerned with Britain’s tax cuts

Germany's Minister of Finance Christian Lindner.(Photo: https://twitter.com/c_lindner)

Speaking at an event hosted by the Frankfurter Allgemeine Zeitung newspaper on Monday, Lindner suggested that it wouldn’t end well…reports Asian Lite News

The German government is concerned that Britain is conducting a “major experiment” by cutting taxes and boosting borrowing just as the central bank is raising interest rates, a media reports said.

Germany’s Finance Minister Christian Lindner raised doubts about British government’s plans to accelerate spending while the central bank tightens policy to rein inflation, The Guardian reported.

In another sign of rising international concern, Lindner warned: “In the UK, a major experiment is starting as the state simultaneously puts its foot on the gas while the central bank steps on the brakes.”

Speaking at an event hosted by the Frankfurter Allgemeine Zeitung newspaper on Monday, Lindner suggested that it wouldn’t end well.

“I would say we wait for the results of this attempt and then draw the lessons,” he said, The Guardian reported.

Larry Summers, a former US Treasury secretary, has warned that the UK government’s ‘utterly irresponsible’ plans could drag the pound below parity against the euro, as well as the dollar.

Summers has heavily criticised Chancellor Kwasi Kwarteng for undermining credibility by saying ‘incredible things’ about planning more tax cuts — those weekend comments pushed the pound to a record low of $1.0327 on Monday.

Summers said he was “very pessimistic about the consequences of utterly irresponsible UK policy on Friday”, but didn’t expect the markets to get so bad so quickly.

Summers also suggested the Bank of England should have taken more decisive action, rather than its timid statement on Monday.

Summers said, “The first step in regaining credibility is not saying incredible things. I was surprised when the new chancellor spoke over the weekend of the need for even more tax cuts. I cannot see how the BOE, knowing the government’s plans, decided to move so timidly.”

ALSO READ-Russia to annex occupied Ukraine territories

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Truss ready to speed up tax cut plan

Advisors to Truss believed the cut could be introduced within days of an emergency budget that her government would deliver in September, if she wins the ruling Conservative Party’s leadership race that is due to end on Sept. 5, it said…reports Asian Lite News

Liz Truss, the front-runner to become Britain’s next prime minister, plans to rush through tax cuts earlier than planned in an attempt to boost the country’s flagging economy, the Sunday Telegraph reported.

Truss was considering accelerating by six months her plan to reverse this year’s increase in social security contributions which had been pencilled in for April 2023, the newspaper said.

Advisors to Truss believed the cut could be introduced within days of an emergency budget that her government would deliver in September, if she wins the ruling Conservative Party’s leadership race that is due to end on Sept. 5, it said.

Truss’s rival, former finance minister Rishi Sunak, says cutting taxes now would add more fuel to Britain’s soaring inflation rate which is set to surpass 13% in October, according to the Bank of England’s latest forecasts.

The BoE has also said Britain is due to enter a 15-month recession starting later this year, something Truss says adds urgency to her plan to cut taxes.

Truss, writing in the Sunday Telegraph, said she wanted to “immediately tackle the cost of living crisis by cutting taxes, reversing the rise on National Insurance and suspending the green levy on energy bills.”

Sunak proposes a different approach by giving support directly to lower-income households that are most exposed to the surge in power bills which will rise sharply again in October.

On Saturday, he reiterated that he wanted to “go further” than the support he provided as finance minister before he resigned in protest at the leadership of Prime Minister Boris Johnson in July.

“It’s simply wrong to rule out further direct support at this time as Liz Truss has done and what’s more her tax proposals are not going to help very significantly, people like pensioners or those on low incomes,” he said.

A recent poll by YouGov showed Truss held a 24-point lead over Sunak among Conservative Party members who will choose the party’s next leader and Britain’s next prime minister.

In her Sunday Telegraph article, Truss kept up her criticisms of the BoE, saying it had exacerbated the jump in inflation and she would “work night and day” to fix the problem.

“That is why I want to look around the world at what the best performing central banks are doing to control inflation and how we can ensure our Bank is delivering what we need it to deliver,” she said.

BoE Governor Andrew Bailey has denied the BoE is to blame for the inflation surge, saying it began to raise interest rates earlier than other central banks and most of the recent acceleration of prices stems from Russia’s invasion of Ukraine.

Sunak under fire

Rishi Sunak, trailing in the two-horse race to replace British Prime Minister Boris Johnson, faced criticism on Friday for saying he had previously instigated policy changes to divert funding away from deprived urban areas.

The ruling Conservative Party is choosing a new leader after Johnson was forced to quit when dozens of ministers resigned in protest at a series of scandals and missteps. Party members are voting by post to select either Sunak or foreign minister Liz Truss.

Polling shows Sunak, who was finance minister between February 2020 and July 2022, is trailing Truss as the two candidates tour the country in a bid to secure votes.

His comments came in a video published on Friday by the New Statesman magazine, which it said was filmed on July 29 at a meeting of Conservative Party members in Tunbridge Wells, a relatively affluent area in south east England.

Sunak is seen telling an audience: “I managed to start changing the funding formulas to make sure that areas like this are getting the funding that they deserve, because we inherited a bunch of formulas from the Labour Party that shoved all the funding into deprived urban areas … that needed to be undone. I started the work of undoing that.”

The New Statesman did not specify who filmed the short video and Reuters could not independently verify the date or the location when the video was made. The context of his comments was not shown.

Asked about the comments, a source in Sunak’s campaign referred to reforms to ensure rural areas received funding alongside urban centres, pointing to his efforts, announced in March 2020, to redraw rules the finance ministry used to allocate investment.

Levelling up isn’t just about city centres, it’s also about towns and rural areas all over the country that need help too,” the source said, of Johnson’s policy to reduce regional inequalities.

“Travelling around the country, he’s seen non-metropolitan areas that need better bus services, faster broadband, or high quality schools. That’s what he’ll deliver as Prime Minister.”

Truss did not immediately comment on the video.

However, the opposition Labour Party seized on the video as evidence that the Conservatives, who have been in power since 2010, are not committed to spreading wealth across the country.

“Public money should always be distributed fairly and spent in areas where it is most needed,” Labour’s spokeswoman on Levelling up, Lisa Nandy, said in a letter to the government, describing the comments as “deeply concerning” and calling for an investigation.

ALSO READ-Sunak scores surprise debate win over Truss