Tax cuts in Budget will not be as large as the autumn’s, Hunt warns

JEREMY HUNT has publicly warned that the tax cuts set to be unveiled in the Spring Budget will not be as large as the ones he announced last November.

Speaking on ITV’S Peston programme, the Chancellor said: “It doesn’t look like I’ll have the kind of room I had for those very big tax cuts.”

It came after the Treasury received the first round of estimates from the Office for Budget Responsibility (OBR) ahead of the Budget on March 6.

While the figures are kept private, it is understood the OBR said that the so-called “fiscal headroom” – money the Chancellor is able to spend while reducing government debt – would be about £14billion a year.

That is far below the £35billion that had been available to Mr Hunt ahead of the last Autumn Statement, after inflation pushed up tax receipts.

The message from Mr Hunt was significant as it appeared to be an attempt to downplay expectations among Tory MPS clamouring for vast tax cuts to boost their electoral chances.

Robert Jenrick, the former immigration minister who quit the Cabinet before Christmas over the Rwanda Bill, yesterday urged Mr Sunak to reduce stamp duty to boost the property market.

Cuts to income tax and national insurance are seen as the leading options for the Budget by Downing Street insiders but changing economic forecasts could limit their ability to act.

Mr Hunt confirmed that he had delivered the same message about the difficulty of cutting tax at a Cabinet meeting on Tuesday.

In the last Autumn Statement Mr Hunt reduced National Insurance and also delivered a major business tax cut by making so-called “full expensing” permanent.

However, in the ITV interview the Chancellor also talked up the need for low taxes: “We look around the world and we notice that countries with lower taxes, predominantly in Asia and North America, tend to be growing faster than countries with higher taxes, which are mainly in Europe.

“So, we do think if we’re going to have a dynamic economy that pays tax revenues, that gives the NHS the funding it needs, the care system, the armed forces, our schools and so on, we do need to move in the direction of being lower taxed.”