Chancellor ‘has £20billion war chest for tax cuts in Budget’
THE Chancellor has been handed a £20billion war chest which he is being urged to use to slash taxes ahead of the general election.
Figures showed public sector borrowing tumbled to £7.8billion last month – £8.4billion less than a year earlier and the lowest December level since 2019.
The totals for the financial year so far are £5billion lower than had been forecast – putting further pressure on Jeremy Hunt to reduce the recordhigh tax burden. Economists say he has up to £20billion of ‘wiggle room’ to reduce taxes at the Spring Budget, which will be central to the Tories’ chances of winning the next election.
In a further boost for Britons, Nationwide has become the latest high street lender to make drastic cuts to its mortgage rates as a price war intensifies – with reductions of
‘Economy showing signs of picking up’
up to 0.81 percentage points. And energy prices are set to fall by almost £450 a year in 2024, bringing relief for millions of households.
John O’Connell, of the TaxPayers’ Alliance, said: ‘ Taxpayers will be encouraged to hear that there are billions in the bank... with the economy showing signs of picking up, it would be a wasted opportunity to not use targeted tax cuts to boost growth.’
Tory former business secretary Sir Jacob Rees-Mogg told the Mail: ‘If there is any flexibility in the Budget taxpayers ought to be allowed to keep their own money.’
Public sector net borrowing fell last month due to a bigger than expected drop in inflation, which cut the amount of interest the Government had to pay on its debts. The end of energy support schemes also boosted public finances.
Capital Economics economist Ruth Gregory said: ‘ December’s better- thanexpected public finance figures brought some cheer for the Chancellor after the recent run of poor out-turns and will give him a bit more wiggle room for a big pre- election splash in the Spring Budget.’
Borrowing in the financial year to December was £119.1billion – £5billion lower than official forecasts from the financial watchdog the Office for Budget Responsibility. Meanwhile, in the same period the Government collected £580.8billion in taxes, an annual increase of £26billion, which helped to boost the public coffers.
Workers paid £294.5billion in income tax and national insurance, £13.4billion more than the same period in 2022.
Figures published by HMRC showed inheritance tax payments reached £ 5.7billion between April and December, £400million more than the previous year. Tax breaks could include a fuel duty freeze from April, costing £6billion a year, and a 1p cut to income tax – costing almost £7billion annually, says Capital Economics.
Samuel Tombs, of research firm Pantheon Macroeconomics, said Mr Hunt will ‘almost certainly cut personal taxes in a bid to improve his party’s chances in the general election’. Conservative grandee Sir John Redwood, who led Margaret Thatcher’s policy unit, urged Mr Hunt to focus on ‘growth-orientated and inflation-reducing tax cuts’, such as reducing energy taxes – but also to look at the 40 per cent threshold for income tax.
‘I would do energy taxes and then I would do business and investment promoting taxes, including income tax.’
The Treasury stressed borrowing levels were only one factor in Mr Hunt’s calculations.
Sources pointed out that government borrowing costs have nudged up by 15 per cent since last month and that lower inflation is expected to reduce tax yields.
EXAMINING their pay slips this month, millions of workers will have been pleasantly surprised to receive an average rise of nearly £40.
In this cost of living crunch, every little helps. But with the tax burden at a 75-year high, the Government must do more to ease their pain.
Thanks to shrinking inflation and lower borrowing, the Office for National Statistics says the public finances are set to be £20billion better off than expected.
This hands Chancellor Jeremy Hunt room for pre- election tax cuts. So he must capitalise on his good fortune.
He should start by scrapping the selfdefeating tourist tax, which bosses in the West End say strangled business over Christmas. But even more importantly, he must do all he can to make life easier for families and firms by leaving more money in their pockets.