Cameron’s tax lock promise scrapped
It was dubbed the ‘dumbest economic policy possible’, and now...
THERESA May will today scrap David Cameron’s manifesto promise not to increase income tax, National Insurance or VAT, the Mail can reveal.
The Prime Minister will insist the Tories remain the party of low taxes as she pledges to keep raising the personal allowance.
But she will get rid of the ‘tax lock’, which was branded a ‘gimmick’ after Mr Cameron’s aides admitted they ‘cooked up on the hoof’ during the 2015 campaign.
The manifesto, which will be unveiled this morning in Halifax, will not include a promise to freeze tax rates. However, it will maintain a commitment to increase by 2020 the tax-free personal allowance to £12,500 and the 40p income tax threshold to £50,000.
Chancellor Philip Hammond ran into trouble with the ‘tax lock’ in March’s Budget when he tried to mount a £1 billion National Insurance raid on the self-employed. The move ended in a humiliating U-turn days later after Tory MPs protested it broke the manifesto pledge made at the 2015 election.
By axing the lock, it would mean the Chancellor was uninhibited at the next Budget in the autumn and give him greater flexibility over managing the economy. One of Mr Cameron’s advisers admitted the ‘tax lock’ had been ‘cooked up on the hoof’ in the final weeks of the 2015 campaign.
Ameet Gill, who was the former prime minister’s head of strategic communications, said in October it was ‘probably the dumbest economic policy’ possible. ‘When I was in government, we made some announcements on the hoof just to fill that vacuum,’ he said.
‘Towards the end of the general election campaign in 2015, we did the five-year tax lock. It was probably the dumbest economic policy that anyone could make.’
On a visit to Washington DC last month, Mr Hammond argued in favour of scrapping the tax pledge, as he warned that blanket promises ‘constrain the ability of the Government to manage the economy flexibly’.
He said: ‘I’m a Conservative. I didn’t come into politics because I believed in higher taxes. I believe in lower taxes.
‘I’m not in the business of having some ideological desire to increase taxes. But I also think we need to manage our economy sensibly and sustainably. We need to address
the remainder of our deficit. Get our fiscal accounts back in to balance and it’s self- evidently clear that the commitments that were made in 2015 manifesto did and do today constrain the ability of the Government to manage the economy flexibly.’
He added: ‘We are and will always be the low-tax party. And Labour will always be the high-tax party.’
On the campaign trail, Mrs May has repeatedly told voters that the Tories ‘will continue to be a party that believes in lower taxes’. During an appearance on ITV’s Peston on Sunday last month she pledged not to raise VAT, but left the door open to other rises. She said: ‘We have no plans to raise the level of tax. In relation to specific taxes, we won’t be increasing VAT.’
Mrs May’s promise to remain the low-tax party comes after Labour set out plans for a tax raid on the country’s 1.3 million highest earners in its manifesto earlier this week that urged voters to stop the ‘rich getting richer’.
The boss of JCB has reportedly donated almost £1 million to the Conservative Party as it builds an election war chest.
Anthony Bamford is said to have told Tory fundraisers they could count on him at a meeting in the past few weeks. His payment is thought to be the largest yet secured by the party.
A source told Sky News the money was ‘ in the £ 1 million ballpark’. Lord Bamford, 71, has given millions to the party in the past 15 years, and also strongly supported Brexit.