MPs are urging Jeremy Hunt to introduce substantial tax reductions to bolster the Conservatives’ prospects in the upcoming election.
According to insiders from the Treasury, the Chancellor faces tight constraints for the upcoming Budget, as projections indicate he has a leeway of merely £13 billion.
Hunt has had to reconsider his initial tax-cutting plans and is now contemplating a modest reduction of 1p in National Insurance, rather than income tax, along with maintaining the freeze on fuel duty.
The combined cost of these initiatives is estimated to be approximately £5.5 billion annually, with Hunt reportedly aiming to preserve a financial cushion of between £6 billion and £7 billion.
He awaits the final budgetary figures from the Office for Budget Responsibility, which are due on Friday, to finalize the Budget details.
Jeremy Hunt (pictured) must implement significant 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 manoeuvre in next week’s Budget, with forecasts suggesting he has headroom of just £13 billion
Initially, the Chancellor had explored a 2p reduction in income tax, as well as cuts to stamp duty and inheritance tax, but according to reports from The Times, these proposals have been set aside.
The reports angered Tory MPs, who urged Mr Hunt to use the Budget next Wednesday to return the party to its ‘true Tory’ values.
Conservative grandee Sir John Redwood, who headed Margaret Thatcher’s policy unit, said that ‘there is plenty of scope for prudent tax cuts’.
‘They are needed to promote growth and to boost revenues,’ he said. ‘The Government should lower the taxes on small business, on the self-employed and on people going to work to give us the boost we need.’
A senior Tory told the Mail: ‘Winning the next election is going to be difficult as it is, but we can certainly help our fortunes considerably by being true Tories again – and that means significant tax cuts.’
A minister added: ‘I’d rather see it come off income tax than national insurance. That resonates much more with people. But people need the confidence that whatever tax cuts we have next week, it’s the first or the latest step in what is going to be a continuous programme of bringing down the tax burden.
‘We need a clear, distinctive Conservative message about why people should vote for us for a fifth term – and part of that has to be that we will bring down their taxes and leave them with more of their money.’
Conservative grandee Sir John Redwood (pictured), who headed Margaret Thatcher’s policy unit, said that ‘there is plenty of scope for prudent tax cuts’
Treasury sources have insisted that any available cash would be prioritised for families over business tax cuts.
But they added that any cuts will be on a smaller scale to the autumn statement.
A source from the Treasury told the Mail: ‘The cost of government borrowing has shot up in recent weeks, so our room for manoeuvre is more limited.
‘We set the bar high last autumn with the biggest tax cutting event since 1988, but we won’t be able to match that scale this time.’
