£10bn bonus in the coffers that means Hunt CAN cut taxes

JEREMY Hunt has pledged further tax cuts as it emerged that he is likely to have up to £ 10billion of headroom to fund them.

The Chancellor said he would emulate Nigel Lawson whose taxcutting policies helped Margaret Thatcher to a third election win.

Forecasts of how much leeway he is likely to have to deliver on Rishi Sunak’s pledge to slash taxes further will arrive this week.

The independent Office for Budget Responsibility could give him from £6billion to £10billion of extra headroom against his fiscal targets, reports suggest.

The Prime Minister has said that there will be ‘more to come’ on taxes following a national insurance cut in the Autumn Statement.

The Spring Budget takes place on March 6, with an expectation that there will be movement on taxes to mollify restive Tory MPs fearful of losing their seats.

Analysts at Capital Economics told the Financial Times that the cost of government borrowing is expected to go down, boosting Mr Hunt.

Paul Johnson, director of the Institute for Fiscal Studies, told the paper that it was ‘plausible’ that the headroom could grow by £10billion but also pointed to indications of economic uncertainty.

Mr Hunt will be able to pledge tax cuts using the bonus as long as he meets his fiscal targets to cut debt as a share of GDP over the course of a Parliament. He told The Mail on Sunday he wanted to ‘relieve pressure on families’ and would stick to the plan of ‘prioritising tax cuts’.

Mr Hunt vowed to take inspiration from the late Conservative chancellor Mr Lawson, who slashed personal taxation which led to the Big Bang in financial markets. ‘Just as Nigel Lawson positioned the City of London for the finance boom in the 1980s, this period of Conservative government has seen the UK positioned for the massive technological boom we’re set to see in the coming years,’ wrote Mr Hunt.

‘The most dynamic economies tend to be places with lower taxes. The lesson is clear: supporting businesses with competitive taxes – not more government spending – is the way to growth.

‘ We Conservatives have always known that, of course but it is worth remembering.

‘The plan is working. That’s why we need to stick to it. It means cutting taxes, not raising them.’

The UK is at the forefront of a tech boom, said Mr Hunt, with hopes that investment in financial technology, health research and semiconductor development will propel the economy.

It is not clear what form tax cuts will take. However the Prime Minister and Chancellor are keen to grow the economy, indicating that further cuts to national insurance or income tax are likely as opposed to targeting inheritance tax or stamp duty.

Mr Hunt may also hold a second giveaway Budget in the autumn before a November general election.

In his article, he wrote of ‘ brimming with confidence about the fundamental strengths of the economy’. He called the UK a country that is ‘really going places, despite the blows of a pandemic and Putin’s energy shock’.

Ahead of the last Spring Budget before the next election, the Treasury and No 10 have discussed how to ensure any tax cuts have the maximum impact on voters.

‘The problem last time was that it was seen as a preelection bribe,’ one strategist told The Times. ‘ This time we’re going to sell it differently, tying it to the broader argument this is about growth.’

‘Relieve pressure on families’