Fuel duty Budget boost for drivers
Hunt will extend ‘temporary’ 5p cut for another year to help calm Tory jitters as shock poll puts party on all-time low
JEREMY Hunt is to extend a 5p cut in fuel duty for another year as he seeks to calm Tory jitters over dire opinion poll ratings.
Whitehall sources told the Mail that the Chancellor will protect motorists in tomorrow’s Budget in a bid to show the Government is on the side of ordinary motorists.
In a £5billion package for drivers, fuel duty will be frozen for the 14th consecutive year and a ‘temporary’ 5p cut in the rate will be extended for another year.
Last night Mr Hunt and Rishi Sunak were still working to agree the details of a Budget which was derailed last week when the Office for Budget Responsibility (OBR) ruled that the Chancellor’s taxcutting proposals were ‘unaffordable’.
He is expected to confirm a 2p cut in personal taxes to demonstrate that the Conservatives are serious about reducing a tax burden that has risen to a peacetime record in the wake of the pandemic and energy crisis.
But future public spending is set to be squeezed and a string of smaller tax rises will be introduced to help pay for the package.
Whitehall sources said the NHS would miss out on extra funding, with no cash boost expected to cut waiting lists.
Yesterday the Institute for Fiscal Studies warned that the health service would need billions in additional funds this year to avoid job cuts. It also urged Mr Hunt to ‘tread carefully’ on reforming the tax regime for non-doms – another proposed measure – warning that thousands of wealthy foreigners could leave the UK if the tax breaks are scrapped.
The political importance of a Budget breakthrough for the Tories was underlined yesterday when a poll put the party on a record low rating of just 20 per cent. The Ipsos Mori survey gave Labour a 27-point lead. If the figures were repeated at a general election, the Tories could be left with just 25 seats.
On the back of the poll, ex-Tory MEP David Campbell Bannerman urged Mr Sunak to step aside in favour of a more popular leader.
A separate survey by Deltapoll put the Labour lead at 14 points and Tory support at 27 per cent.
Yesterday Mr Sunak put his troubles to one side and was all smiles as he helped launch Panattoni Park, a £900million commercial complex on the site of the former Honda plant in Swindon.
However senior Tories acknowledge that the Budget may be one of the last opportunities to show the public that they have returned to their tax-cutting traditions.
Mr Hunt yesterday confirmed that he hopes to move towards a ‘ lower taxed economy’ but acknowledged it would have to be done in a ‘responsible’ way.
Ministers had hoped to produce a major tax giveaway this week but worsening projections from the OBR have constrained Mr Hunt’s ability to act.
Mr Sunak is pushing to cut the basic rate of income tax by 2p but the straitened circumstances mean the Chancellor may have to settle for a similar cut in national insurance. This is cheaper as pensioners do not pay it.
To help balance the cost of the Budget package, Mr Hunt will trim future public spending plans by £ 5billion and raise a string of smaller taxes.
These could include extending the windfall tax on North Sea oil and gas, a new tax on vaping, coupled with higher taxes on smoking, plus raising air passenger duty on business flights and cutting tax breaks for second home owners.
But there will be no new money for defence, despite threats from Russia and the Middle East crisis.
The 5p cut in fuel duty was introduced by Mr Sunak in 2022 after oil prices were sent soaring by Russia’s invasion of Ukraine. It was meant to last for a year but was renewed again last March.
Treasury officials had pushed to scrap it after a drop in pump prices but this idea was vetoed by Mr Hunt as politically untenable.
‘Party on record low poll rating’