Get ready for tax rises middle classes warned

PHILIP Hammond braced middle earners for tax rises last night, as he prepared to use today’s Budget to tighten his grip on the public finances while Britain leaves the EU.

The Chancellor will upgrade growth forecasts again today when he delivers what Treasury sources last night described as an ‘upbeat assessment’ of the economy’s performance since the EU referendum.

But, with the formal process of leaving the EU potentially just days away, he last night stressed the need to make the economy ‘resilient’ to potential turbulence.

The Chancellor will also say that he is determined to continue tackling the huge deficit left behind by the last Labour government. In a stark warning last night, the Treasury said Mr Hammond believed ‘a strong economy is built on resilience, so the Government will continue reducing the deficit, not shirking the difficult decisions on tax and spending, while still investing in Britain’s future’.

Mr Hammond, who is delivering his first Budget, also dropped a heavy hint that low earners will be spared the brunt of any tax rises, leaving those on middle and higher incomes to pick up the tab.

Sources said he would acknowledge that ‘ many are still feeling the pinch, almost ten years on from the financial crash’, and say that ‘the Government will do everything it can to help ordinary working families to get on’.

The decision to raise taxes will unnerve some Tory MPs who are already concerned by forecasts showing the Government is on course to preside over the highest tax burden since the 1980s.

But Mr Hammond believes it is essential to press on with the deficit reduction programme.

And ministers take comfort in the fact Labour has lost all economic credibility under Jeremy Corbyn. An ICM poll for The Guardian found that only 12 per cent of voters thought Labour would make a better job of handling the economy, while 43 per cent backed the Conservatives.

Mr Hammond will today confirm plans to invest £320million in building 110 free schools, some of which could be the first new grammars for decades. He will also unveil plans for a shake-up in vocational training designed to ensure British youngsters gain the skills the economy needs.

Mr Hammond is expected to confirm that the economy is growing faster than predicted at the Autumn Statement in November. The Prime Minister’s official spokesman said: ‘We go into the Brexit negotiations from a position of strength.’

Surging tax revenues also mean that the deficit is likely to be £12billion lower than forecast in November. Some analysts predict that higher tax receipts could give him a £45billion windfall over the next five years. But the Chancellor has indicated he will hoard the money to give extra flexibility in dealing with any economic fallout from Brexit in the next two years.

The Treasury last night refused to comment on potential tax rises. Sources have refused to rule out a £1billion raid on the self-employed – although they point out that raising National Insurance contributions to bring them in line with those in salaried jobs would mainly impact on the better off.