July 18, 2024

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Improved UK fiscal position gives Hunt room for Autumn Statement giveaways

2 min read

In September, chancellor Jeremy Hunt said that making tax cuts would be “virtually impossible” in his Autumn Statement. With just three days to go, Tory MPs believe they are a racing certainty.

Two big things have happened since Hunt issued that warning. The first is that a “stealth” tax raid on middle Britain has helped to improve the UK’s fiscal position, possibly by about £20bn, offering the chancellor more room for giveaways.

The second is that prime minister Rishi Sunak and the Conservative party are floundering in opinion polls, typically trailing Labour by 20 points or more, while downbeat Tory MPs are demanding a fiscal pick-me-up now.

Decisions that were being pencilled in for the Spring Budget, including a cut to income tax, could be hurried forward by Hunt to appease his increasingly restive colleagues in the Commons who fear defeat in the general election expected next year, according to officials.

“It feels like we’re in too high a gear, going up a hill,” said one influential Tory MP. “We are losing momentum and we have been since the spring.” Sunak’s Tory conference speech, the King’s Speech and cabinet reshuffle failed to achieve the political “gear shift” craved by many of his colleagues.

Hunt had been urged by some Tory MPs to cut inheritance tax this week, a levy which is broadly unpopular, according to polls, even if it is only paid by fewer than 4 per cent of all estates.

Tory election chief Isaac Levido believes that cutting inheritance tax is a policy that will mobilise Tory voters in the shires, traditional Conservative leaning counties in England, to turn out to vote next year, according to party strategists.

But government officials said cuts to inheritance tax would be deferred until next year. Some in the Treasury admitted to being spooked by the idea of drawing up a move that would directly benefit wealthy politicians including Sunak and Hunt during a cost of living crisis.

Instead, the prime minister and…

2023-11-19 14:47:40

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