Hunt considers raising business class flight fares to fund tax cuts

Chancellor promises ‘prudent’ set of fiscal measures in spirit of former Labour chancellor

JEREMY HUNT is considering a rise in business class air fares as part of a series of measures targeting the wealthy to fund a tax cut in this week’s Budget.

The Chancellor and the Prime Minister were last night locked in meetings, putting the finishing touches to Wednesday’s statement. It is understood that they will cut 1p or 2p from National Insurance or income tax.

To fund this, a package of measures is being drawn up, with options understood to be targeting the wealthy.

One proposal under discussion is increasing air passenger duty for those in business class, potentially raising hundreds of millions of pounds. Another measure under consideration is abandoning perks for second home owners who make money from holiday lets, raising an estimated £300 million.

The pair are also set to scrap or scale back “non dom” status, forcing wealthy people who live abroad but make money in the UK to pay more tax.

Yesterday, Mr Hunt said he had a “moral duty” to put more money back in workers’ pockets.

But he said that although he wanted to be a Nigel Lawson, fiscal constraints will force him to be a “prudent” Gordon Brown instead.

“It’s going to be a prudent and responsible budget for long-term growth,” Mr Hunt told Sky News.

“When it comes to tax cuts I do believe when you look around the world, the countries with lower tax tend to grow faster – America, Asia.”

The measures under consideration targeting the wealthy have been met with a hostile reaction from some leading Tory MPS.

Sir John Redwood, the former Cabinet minister, said: “I would strongly recommend that they forget all these new taxes and extra taxes and get on with the real job which is lower taxes.

JEREMY HUNT has said he wants to emulate Nigel Lawson in next week’s Budget but fiscal constraints will force him to mirror a “prudent” Gordon Brown instead.

The Chancellor expressed admiration for his tax-cutting Tory predecessor, Lord Lawson, who died last year at 91. But he downplayed expectations for any flashy pre-election giveaways.

Instead, Mr Hunt repeatedly emphasised how he would keep a tight hold of the purse strings with his “prudent” Budget. He appeared to make reference to Mr Brown, who often invoked “prudence” in his management of public finances in his early years at the Treasury.

Yesterday morning, Mr Hunt told Sky News’ Trevor Phillips: “It’s going to be a prudent and responsible Budget for long term growth. When it comes to tax cuts I do believe when you look around the world, the countries with lower tax tend to grow faster – America, Asia.

“So in the long run, we need to move back to being a lower taxed, more lightly regulated economy, but it would be deeply unconservative to cut taxes in a way that increased borrowing.”

He added: “I think of the great tax-cutting budgets of the past – Nigel Lawson’s Budget in 1988. The reason that was so significant is because those tax cuts were permanent and people need to know that these are tax cuts we can really afford.”

Defence spending

There are a number of demands for Treasury attention ahead of the Budget on Wednesday. In addition to the usual pressure for a giveaway before the election, Grant Shapps, the Defence Secretary, has urged Mr Hunt to raise defence spending to 2.5 per cent of GDP.

The “bold action” – which is expected to cost about £9 billion – would “resonate with our allies and adversaries”, Mr Shapps wrote to Mr Hunt, as reported by The Telegraph on Saturday.

However, Mr Hunt told the BBC’S Laura Kuennsberg: “If we’re going to spend the money on defence as I believe we will need to do in the future, what we need to have is a healthy growing economy.”

Civil Service

Mr Hunt also said he wanted public spending to be more efficient in order to satisfy voter demands for European-level services paid for by US taxation levels. He argued that the Civil Service should be reduced to pre-pandemic levels and hit out at mandarins for wasting taxpayers’ money on diversity officers.

“What most people want is better public services and a lower tax burden. It’s the old thing isn’t it: can we have European public services and American levels of tax?” Mr Hunt said.

“The only way that we have a chance of delivering something like that is by spending the money that we spend on public services much more efficiently.”

Migration

Later yesterday Mr Hunt told Camilla Tominey, The Telegraph’s associate editor, on GB News that he wanted to end the economy’s reliance on migrant workers. Net migration hit a record 745,000 in the year to December 2023.

Instead, he continued, the Budget will start to move Britain to a “highwage, high-skill economy that is not dependent on high levels of migration”.

Mr Hunt denied that the Treasury was infatuated with high migration, adding: “I think migration in limited numbers can be beneficial but what I think is wrong is this idea that you should get economic growth by allowing in more migrants.”

Lee Anderson

The Chancellor used some of the strongest rhetoric of any minister to criticise Lee Anderson, a former deputy leader of the Conservative Party who claimed that Sadiq Khan, the Mayor of London, was controlled by “Islamists”.

He said: “What Lee Anderson said was wrong. It was interpreted by many people as fuelling anti-muslim hatred and divisions and he was given a chance to apologise – he didn’t.”

Extremism

Mr Hunt said Britain’s “social fabric” needed to be restored, amid warnings of a surge in extremist activity after Israel was invaded by Hamas on Oct 7.

Since Israel responded in Gaza, pro-palestine marches have taken place in major cities. Some participants have chanted “jihad” or “from the river to the sea” – generally interpreted as calling for the destruction of the state of Israel.

“I’m not Jewish, but I’ve been contacted by Jewish people who told me that they are afraid to go outside their front doors when those marches are happening,” Mr Hunt said.

“And I think it’s very important that we restore the social fabric of this country so that people understand that when there are demonstrations, they will be peaceful and within the law, and that they are not intimidatory. And I think we have seen some of that.”