Less room for tax cuts in the budget than last year, Hunt tells Cabinet

Jeremy Hunt is understood to have warned the Cabinet that opportunities for tax cuts in the budget are likely to be smaller than they were in the autumn statement.

The Chancellor, in comments first reported by The Times, told colleagues: “We are not likely to have as much room for tax cuts as we had in the autumn.”

He pointed to major structural weaknesses in the UK economy as being a factor, highlighting how the US, France and Germany are all more productive.

The comments come after the International Monetary Fund (IMF) on Tuesday warned further tax cuts could risk the government’s ability to invest money in the NHS and other vital services.

Mr Hunt cut national insurance in the autumn statement in November, a move the Office for Budget Responsibility thinks will cost the Treasury around £9.76 billion in the 2028 tax year.

The Treasury says the change means a worker on a £35,000 salary will be £450 better off a year.

Responding to the IMF'S briefing on Tuesday, Mr Hunt said it was “too early to know whether further reductions in tax will be affordable in the budget”.

He said it continued to be government thinking that “smart tax reductions can make a big difference in boosting growth”.

There has been clamour within Tory ranks for Mr Hunt to offer up headline reductions in tax in March as part of a pitch to woo voters ahead of the general election.

For a few weeks now, Sir Keir Starmer has got the better of Rishi Sunak at Prime Minister’s Questions in the face of dire economic forecasts and Tory infighting over the Rwanda scheme.

The Labour leader has managed to damage Mr Sunak by asking questions he can’t answer, combining a focus on detail with lines funny enough to go viral, broadening the reach of his party.

However, at the latest session, Sir Keir struggled to land blows, despite bringinguptherealcaseofaniceland employee named Phil who is struggling to pay his mortgage.

His question came after Tory MP George Freeman had to stand down from his ministerial role as he couldn’t afford his own house payments. It makes sense as a tactic, referencing relatable problems to an MP being impacted by them.

Sir Keir said: “If the member for Mid-norfolk [Mr Freeman] on a £120,000 can’t afford this Tory Government, how on earth can people like Phil?”

Unfortunately for the Labour leader, his questions fell flat..

The price of mortgages is a real problem facing millions of people. But like so many of Labour’s criticisms, they have less weight without a contrasting plan or vision to back them up.

It was instead the SNP Westminster leader Stephen Flynn who enjoyed PMQS the most, mocking Labour twice over yesterday’s announcement they would not bring back the cap on banker’s bonuses.

Mr Flynn said: “When the Tories scrapped the cap on bankers bonuses in the autumn, the Labour party rightly opposed it. Yet here we are just three months later, and the Labour party support scrapping the cap on bankers bonuses. Shameful.”