Treasury warns of tax rises to fill financial hole

The Treasury has warned of “inevitable” tax rises as PM Rishi Sunak seeks to fill a “black hole” in public finances. 

The PM met with the chancellor on Monday and agreed “tough decisions” were needed on tax rises and spending. 

The Treasury gave no details but said “everybody would need to contribute more in tax in the years ahead”.

According to the BBC, the fiscal black hole is at least £50bn. 

A source told the BBC that given the scale of borrowing for energy bills support and the Covid pandemic “we won’t be able to fill the fiscal black hole through spending cuts alone”.

The Treasury said: “Given the eyewatering size of the fiscal black hole, the PM and the chancellor agreed that tough decisions are needed on tax rises, as well as on spending.”

Sources have told the Telegraph that Chancellor Jeremy Hunt is planning to fill the shortfall through a combination of 50% tax rises and 50% cuts to public spending. 

While the Treasury said Mr Hunt and Mr Sunak “agreed on the principle that those with the broadest shoulders should be asked to bear the greatest burden,” it warned that “given the enormity of the challenge, it is inevitable that everybody would need to contribute more in tax in the years ahead”.

The government fiscal statement will be released on 17 November.