Chancellor Jeremy Hunt says, everyone will have to pay more tax under plans due to be announced on Thursday.
“I’ve been explicit that taxes are going up,” he told the BBC’s Laura Kuenssberg.
He also confirmed that he would provide more information about additional assistance for people struggling with energy bills, but warned that there would be constraints.
Labour accused the Conservatives of creating a “total mess” of the economy.
Shadow chancellor Rachel Reeves said Mr Hunt was choosing to tax working people while doing “little to close tax loopholes which mean some of the wealthiest don’t pay their fair share”.
Mr Hunt was speaking to the BBC just days before he is due to deliver his tax and spending plans in Parliament as part of the Autumn Statement.
The BBC has been told the chancellor is set to announce spending cuts of about £35bn and plans to raise £20bn in tax.
It comes as the UK faces major economic challenges, with soaring living costs and a warning from the Bank of England that the country is facing its longest recession since records began.
It also follows the mini-Budget of former Prime Minister Liz Truss and her then chancellor, Kwasi Kwarteng, which led to market turmoil and a jump in government borrowing costs. Many of those policies have since been reversed by Mr Hunt.
Independent forecasts are understood to have identified a gap of around £55bn in the public finances – although some economists have questioned the size of the ‘black hole’.
‘Unappetising announcements’
Laura Kuenssberg, Presenter, Sunday with Laura Kuenssberg
“Everyone is going to pay more tax” – not the kind of political message any minister would ever choose to say out loud.
But that is the clear statement from Chancellor Jeremy Hunt, preparing the ground for a pretty unappetising set of announcements he is going to make this Thursday.
As ever at this stage in the cycle, the occupants of No 11 are coy about giving any specifics. But alongside that bold and important statement that genuinely will affect everyone in one way or another, it is abundantly clear that public services are in for a hard time with no guarantee there’ll be extra cash to help them cope with the costs of inflation.
And if that wasn’t enough, the help that everyone has been receiving with their energy bills will come to an end for many.
These are important days for the new chancellor, and new Prime Minister Rishi Sunak, painting a grim scenario for the next few years.
It will take much political skill to be able to get the public on their side, and back these decisions. Money is short, but significantly behind in the polls, and political goodwill towards the government is too.
It also won’t have escaped people’s notice that the chancellor accepted Brexit had costs for the economy too. Wrapped up in suggestions that there were lots of opportunities still to come, it’s a rare acknowledgement from a Conservative politician.
Speaking to the BBC, Mr Hunt acknowledged his plans would “disappoint people” – but he promised to protect the “most vulnerable”.
“We have the plan to see us through choppy waters… we will make the recession we are in as short and shallow as possible.”
The BBC has been told Mr Hunt is planning to freeze tax thresholds – the levels of income at which people begin to pay more tax – until 2028.
While he did not confirm these plans when appearing on Sunday with Laura Kuenssberg, the chancellor said: “I think I’ve been completely explicit that taxes are going to go up, and that’s a very difficult thing for me to do because I came into politics to do the exact opposite.”
He did not spell out which taxes could go up, but increasing income tax, VAT or National Insurance would break a promise made in the Conservative’s 2019 manifesto.
Some Conservatives MPs have raised concern about increasing taxes, with former party leader Iain Duncan Smith telling Sky News it could lead to a “deeper” recession.
Addressing the concerns of his colleagues, Mr Hunt said the previous leadership had tried that approach, “in other words a plan that doesn’t show how, in the long run, we can afford it”.
“We have tried that, we saw it didn’t work.”
On energy costs, Mr Hunt praised his predecessor Mr Kwarteng for introducing a price cap on the typical household energy bill.
The energy price guarantee had been due to last for two years, but after taking over from Mr Kwarteng, Mr Hunt announced it would expire in April.
Speaking to the BBC, he said he would set out what further support would be given to those struggling on Thursday.
However, he emphasised that future help had to be “done on a sustainable basis” and there would have to be “some constraints”.
Asked if he was ditching the energy plan set out by former prime minister Boris Johnson, the chancellor said he admired Mr Johnson’s “big visions” but added there were elements of “cakeism” – a reference to the phrase: “Have your cake and eat it.”
He said he wanted to “deliver the exciting things he outlined” but that actions had to be credible and affordable.
On whether Brexit had damaged the economy, Mr Hunt said: “I don’t deny there are costs, but there are also opportunities.”
He said the coronavirus pandemic had prevented the UK from taking advantage of opportunities open to it after leaving the European Union.
Labour’s Rachel Reeves said she recognised there would be “constraints” on what the government could do, partly because of “mistakes the government has made”.
However, she added: “Just because you have to make difficult decisions it doesn’t mean you have to make the same decisions.”
She said Labour had “no plans” to raise the income tax or national insurance and would focus on closing “loopholes” in the tax system.
The Liberal Democrat’s Treasury spokesperson Sarah Olney said: “Hardworking families look set to be clobbered with yet more unfair tax hikes because the Conservative party crashed the economy.”
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