Jeremy Hunt said he cannot promise tax cuts before the next election despite Government borrowing coming in £13.2bn below official forecasts.
The Chancellor told the British Chambers of Commerce’s annual conference that his “overwhelming priority” is to reduce inflation.
He told bosses gathered in London that “we aren’t in a position to know whether we’re going to have any headroom at all” for tax cuts.
He added. “We have to get our taxes down, particularly our business taxes down, but the worst tax of all is inflation.”
It comes after Ruth Gregory at Capital Economics said last month that the Government would have “more wiggle room to cut taxes/raise spending ahead of the next general election” after borrowing £13.2bn less than OBR forecasts in the year to March.
Mr Hunt also warned businesses they cannot rely on “unlimited, low skill” migration to plug workforce gaps but conceded that taxes are currently too high.
Asked this morning where he stood in a Cabinet row over immigration, the Chancellor said: “The Brexit decision, whichever side of that you were on, was a decision to change our economic model towards being a high skill, high wage economy and I think that is something everyone instinctively supports.
“It was a decision to move away from being dependent on unlimited, low skill migration.”
He said he still wanted businesses to be able to “find the labour they need” and that skills shortage lists for certain sectors such as care homes and construction were designed to allow limited migration to help.
But he said this would have to be “at the margins” and that Britain should move towards a higher employment model such as that of Holland, which could add another two million people to the workforce.
“What we need to do is tap into the incredible potential we have here at home,” he said.
His comments come after a Cabinet split over how to bring migration down without damaging the economy.
Suella Braverman, the Home Secretary, on Tuesday had all but one of her immigration reforms blocked by cabinet colleagues.
The Chancellor also said it is for businesses “to find their own way” regarding people working from home or the office but said he is worried about “the lack of creativity” from permanent home-working. He said:
I think it’s something for businesses to find their own way through.
There are some very exciting opportunities created by the fact that we’ve all learned to use Zoom in teams for meetings.
On the other hand, there is nothing like sitting around the table, seeing people face to face developing team spirit – and I worry about the loss of creativity.
When people are permanently working from home and not having those water cooler moments where they bounce ideas off each other.
