- Treasury sources say the Chancellor has limited room for tax cuts in the budget
- The Conservatives have warned that they must be cut to have a chance in the elections.
Jeremy Hunt must implement major tax cuts to give the Conservatives a chance at the next election, MPs have warned.
Treasury sources say the Chancellor has limited room for maneuver in next week’s Budget, with forecasts suggesting he has room for maneuver of just £13bn.
It has been forced to scale back planned cuts and is now considering removing just 1p from National Insurance – rather than income tax – and extending the freeze on fuel taxes.
The two measures would cost around £5.5bn a year in total, and Hunt is said to want to leave a cushion of between £6bn and £7bn.
You will receive the final set of margin figures from the Office for Budget Responsibility on Friday, on which the final budget will be decided.
Jeremy Hunt (pictured) must implement major tax cuts to give the Conservatives a chance at the next election, MPs have warned.
Treasury sources say the Chancellor (pictured) has limited room for maneuver in next week’s budget, with forecasts suggesting he has room for maneuver of just £13bn.
The Chancellor had previously considered a 2p cut in income tax and a reduction in stamp duty and inheritance tax. But The Times claims these plans have been shelved.
The reports angered Tory MPs, who urged Hunt to use next Wednesday’s budget to return the party to its “true Conservative values”.
Conservative grandee Sir John Redwood, who headed Margaret Thatcher’s policy unit, said “there is plenty of scope for prudent tax cuts”.
“They are necessary to promote growth and increase income,” he said. “The Government should reduce taxes on small businesses, the self-employed and people who go to work to give us the boost we need.”
A senior Conservative told the Mail: “Winning the next election is going to be difficult as things stand, but we can certainly improve our fortunes considerably if we become true Conservatives again – and that means significant tax cuts.”
One minister added: “I would rather it be deducted from income tax than national insurance.” That resonates much more with people. But people need confidence that whatever tax cuts we have next week, they will be the first or last step in what will be an ongoing program to reduce the tax burden.
“We need a clear and distinctive conservative message about why people should vote for us for a fifth term, and part of that has to be that we will lower their taxes and leave them more money.”
Conservative grandee Sir John Redwood (pictured), who headed Margaret Thatcher’s policy unit, said there is “plenty of scope for prudent tax cuts”.
Treasury sources have insisted that any cash available would be prioritized for families over corporate tax cuts.
But they added that any cuts will be on a smaller scale than the fall statement.
A Treasury source told the Mail: ‘The cost of public borrowing has soared in recent weeks, so our room for maneuver is more limited.
“Last fall we set the bar high with the largest tax reduction since 1988, but this time we won’t be able to match that scale.”