Leadership contenders urged to endorse new charter for tax cuts
CONSERVATIVE leadership contenders will be asked to pledge their support for urgent tax cuts and deregulation, by a new caucus of parliamentarians warning that Tories must rediscover the party’s “firm principles”.
Nadhim Zahawi, the Chancellor, and Suella Braverman, the Attorney General, are expected to be among leadership hopefuls endorsing a “charter for tax cuts”, that will be published by Conservative Way Forward (CWF), a group being relaunched tomorrow by Steve Baker, the former Brexit minister.
The group’s parliamentary board includes Lord Frost, the former Cabinet Office minister, Baroness Morrissey, a Brexiteer who quit a government role in June over Boris Johnson’s leadership, Robert Jenrick, the former housing secretary, and Lord Hannan, a Brexiteer and Telegraph columnist.
The CWF relaunch, at the Churchill War Rooms in Westminster, has the potential to become an informal hustings before the leadership contest formally gets underway. It has echoes of the One Nation Caucus, relaunched by Damian Green, the former Cabinet minister, to put pressure on candidates in the 2019 leadership election.
Senior Conservatives such as Mr Baker and Lord Frost have criticised Mr Johnson and Rishi Sunak, the former chancellor, for their National Insurance increase and for failing to cut levies such as income tax.
Today, in separate interviews with The Sunday Telegraph, Sajid Javid and Jeremy Hunt, both former health secretaries, pledge to bring forward the planned 1p income tax cut to next year and reduce corporation tax. Mr Javid also declares that he would reverse the NI increase.
In his statement on Thursday, the Prime Minister claimed he was “committed” to “cutting taxes”, saying that was “the way to generate the growth and the income we need to pay for great public services”. By contrast, Mr Sunak has centred his campaign on playing down the prospect of imminent tax cuts.
Before he quit as chancellor, both No 10 and No 11 insisted that tax cuts demanded by Conservative backbenchers would worsen inflation.
But the “charter”, written by Julian Jessop, an influential economist, rebuts the claims, saying: “In fact, they could actually reduce it.”
In the document, seen by this newspaper, Mr Jessop, a former government economic adviser, calls for lower income tax by lifting a freeze on thresholds and bringing forward the planned 2024 cut in the basic rate; cancelling or scaling back the plan to increase corporation tax from the current 19 per cent to 25 per cent; and cutting VAT on fuel.
He adds: “What’s more, tax cuts could actually reduce inflation, both directly (such as cuts in VAT or fuel duty) and indirectly (income tax cuts might increase the incentive to work, easing labour shortages and taking some of the pressure off wages).” In a foreword to the paper, Mr Baker, who will chair
CWF, states: “Today, across a range of issues, the Conservative Party is in the wrong place, heading in the opposite direction of conservatism, limiting our country’s potential, contributing to the cost of living crisis and risking a Labour government.
“With taxes and government spending at their highest for more than six decades, we’re grinding miserably into the future trying to meet unaffordable state spending commitments to fund my generation’s day-to-day consumption.”
MPs who have declared their intention to run in the leadership contest will be asked to endorse the paper, and Mrs Braverman is expected to be among those preparing to do so. The Attorney General has previously spoken out against the planned windfall tax on energy firms, saying: “I think we want to incentivise investment. Profits are not an enemy of Conservatives. Profits mean more investment. Profits mean more research. Profits mean more jobs.”
Liz Truss, the Foreign Secretary, also opposed the windfall tax and spoke against the NI hike in Cabinet. During the last leadership contest she warned that the “tax burden is too high”, adding: “We need to make arguments for tax cuts across the board, particularly those that damage growth.”
Mr Zahawi, who took over as Chancellor has indicated that he would like to reverse the corporation tax increase.
Mr Baker, who is endorsing Ms Braverman, adds: “Our movement will demonstrate to the Government that it is the talents and ingenuity of the British people that they need to trust to get us through this cost of living crisis, not the state’s worst instincts to take people’s money and plan their lives for them.”
‘Today, the Conservative Party is in the wrong place, heading in the opposite direction of conservatism’