Is that it? Just a 1p Budget cut to NI and an extension of fuel duty freeze

JEREMY Hunt must implement significant tax cuts to give the Conservatives a chance at the next election, MPs have warned.

Treasury sources say the Chancellor has limited room for manoeuvre in next week’s Budget, with forecasts suggesting he has headroom of just £13 billion.

He has been forced to scale back planned cuts and is now looking at taking just 1p off National Insurance – rather than income tax – and extending the fuel duty freeze.

The two measures would cost around £ 5.5 billion a year in total, and Mr Hunt is said to want to leave a buffer of between £6 billion and £7 billion.

He will receive the final set of headroom figures from the

‘There is plenty of scope for cuts’

Office for Budget Responsibility on Friday, upon which the final Budget will be decided.

The Chancellor had previously considered a 2p cut in income tax, and a reduction to stamp duty and inheritance tax. But The Times claims these plans have been shelved.

The reports angered Tory MPs, who urged Mr Hunt to use the Budget next Wednesday to return the party to its ‘ true Tory’ values.

Conservative grandee Sir John Redwood, who headed Margaret Thatcher’s policy unit, said that ‘there is plenty of scope for prudent tax cuts’.

‘They are needed to promote growth and to boost revenues,’ he said. ‘ The Government should lower the taxes on small business, on the self-employed and on people going to work to give us the boost we need.’

A senior Tory told the Mail: ‘Winning the next election is going to be difficult as it is, but we can certainly help our fortunes considerably by being true Tories again – and that means significant tax cuts.’

A minister added: ‘I’d rather see it come off income tax than national insurance. That resonates much more with people.

But people need the confidence that whatever tax cuts we have next week, it’s the first or the latest step in what is going to be a continuous programme of bringing down the tax burden.

‘We need a clear, distinctive Conservative message about why people should vote for us for a fifth term – and part of that has to be that we will bring down their taxes and leave them with more of their money.’

Treasury sources have insisted that any available cash would be prioritised for families over business tax cuts.

But they added that any cuts will be on a smaller scale to the autumn statement.

A source from the Treasury told the Mail: ‘The cost of government borrowing has shot up in recent weeks, so our room for manoeuvre is more limited.

‘ We set the bar high last autumn with the biggest tax cutting event since 1988, but we won’t be able to match that scale this time.’