Election blow for Tories as Jeremy Hunt scrambles to cool hopes of big tax cuts at Budget... while poll shows Labour 19 points ahead
Jeremy Hunt moved to cool hopes of big tax cuts in the Budget today in an election blow for the Tories.
The Chancellor insisted he is determined to 'lighten' the burden ahead of the crucial package in March.
But he risked inflaming Conservative unrest by warning that they are unlikely to be as significant as the reductions in national insurance from the Autumn Statement.
Many MPs believe a striking move on tax is the only way of restoring the party's fortunes ahead of an election, expected towards the end of the year.
And a Savanta poll today underlined the scale of the task facing Rishi Sunak, with Labour 19 points ahead.
Jeremy Hunt moved to cool hopes of big tax cuts in the Budget today in an election blow for the Tories
A Savanta poll today underlined the scale of the task facing Rishi Sunak , with Labour 19 points ahead
The comments come after the IMF downgraded growth forecasts and took the extraordinary step of warning Mr Hunt not to cut taxes
Speaking to the BBC's Political Thinking podcast, Mr Hunt reiterated in public a warning he gave to the Cabinet earlier this week.
'It does not look to me like we will have the same scope for cutting taxes in the spring Budget that we had in the autumn statement,' Mr Hunt said.
'And so I need to set people's expectations about the scale of what I am doing because people need to know that when a Conservative government cuts taxes we will do so in a responsible and sensible way.'
He added: 'But we also want to be clear that the direction of travel we want to go in is to lighten the tax burden.'
Mr Hunt said he is still waiting for the 'final numbers' from the Office for Budget Responsibility (OBR) to tell him how much so-called fiscal headroom he is likely to have to administer tax cuts or spending increases while meeting his fiscal rules.
He also stoked a row with the watchdog after its chairman appeared to liken public finance forecasts last year to a 'work of fiction'.
Giving evidence to the Lords Economic Affairs Committee last month, Richard Hughes said: 'Some people call (the projections) a work of fiction, but that is probably being generous when someone has bothered to write a work of fiction and the Government hasn't even bothered to write down what its departmental spending plans are underpinning the plans for public services.'
Asked about the remarks, Mr Hunt said: 'Those words are wrong and they should not have been said.
'The Government decides spending plans and spending reviews.
'The next spending review will start in April 2025 and obviously until that point when that spending review is done, we do not publish our spending plans. No government ever has.'
But Paul Johnson, director of the Institute for Fiscal Studies (IFS) think tank, said Mr Hunt's current spending plans mean there could be 'some pretty significant cuts' for some public services even before further tax cuts are administered.
He told BBC Radio 4's Today programme: 'I think the transparent thing to do would be to say, 'Here are my tax cuts, and this is what this would mean for education spending, social care spending, local government spending'.
'I think it would be very difficult to do it (cut taxes) without having some really significant effects on the quality of public services.'
The comments come after the IMF took the extraordinary step of warning Mr Hunt not to cut taxes.
The international body's message drew fury from senior Conservatives, who pointed out its forecasts for the UK have been consistently wrong.
Mr Hunt hinted that the IMF's comments had irked him but said he agreed that 'untargeted tax cuts that are just crowd pleasers' are not a good idea.
'But if they are strategic, smart tax cuts then that is a very important part of the strategy to grow the economy,' he told the BBC.
Taxes as a share of GDP have been heading towards a new high since the Second World War
Mr Hunt cut national insurance in November's autumn statement, a move the OBR thinks will cost the Treasury about £9.76 billion in the 2028 tax year.
In a reduction that came into force on January 6 and is being felt in pay packets this month, the main rate of national insurance was sliced by two percentage points, from 12 per cent to 10 per cent.
The Treasury says the change means a worker on a £35,000 salary will be £450 better off a year, although critics say the benefits are offset by the continuing freeze in personal tax thresholds, pulling millions into paying more to the Exchequer.
