Mr Hammond toils on a tale of two Budgets
opinion on some VAT changes that could be pretty difficult for small firms,” another Tory MP told me. A Budget that raises the overall tax burden while handing out some reductions for lower earners should be expected.
Any shadow Budget for a “nodeal” scenario will be a very different prospect. Treasury officials have been modelling plans for an economy turbo-charged by a series of drastic tax cuts, including reductions in both income and corporation tax, designed to transform the UK into a low-tax haven. It is a vision that strikes terror into the eurozone.
SOME Tories wonder why the Treasury will only contemplate such an attractive tax-cutting model when planning for a breakdown in the Brexit talks. If rock-bottom taxes could kick-start the economy in a no-deal scenario, why not try the same approach even if Mrs May succeeds in agreeing a deal?
Even without the extra £40billion for the Treasury from the cancelled EU divorce fee in the event of a no-deal departure, a big reduction in the tax burden could deliver the rocket boost the economy desperately needs as the country begins to make its own way in the world free of the shackles of the EU.
No one at Westminster expects the cautious Mr Hammond to make that case in his Budget. But a significant number of Tory MPs suspect that by sticking to the safe approach in his big speech rather than opting for the secret radical plan, the Government could be missing the opportunity to get Brexit Britain booming.
PLANS: Philip Hammond is preparing for different outcomes