Hunt declares war on waste to head off revolt on tax rises

JEREMY HUNT is to launch a war on government waste as he tries to stave off mounting Tory opposition to his programme of tax rises.

John Glen, the Chancellor’s deputy in the Treasury, said it was “outrageous” that taxpayers’ money was being “soaked up by the system when it could be put towards areas that really need it”.

The pair have drafted in Lord Maude, who conducted an efficiency review of the Civil Service for David Cameron in 2012, to suggest where ministers can cut departmental budgets further without worsening the crisis in the health service or scrapping financial support for households dealing with soaring bills.

Writing for The Sunday Telegraph, Mr Glen says that ministers will restrict government spending in an effort to avoid “throwing fuel on the fire” of inflation.

But Mr Hunt is braced for a backlash from Conservative MPs, who have argued that his planned tax increases will narrow the ideological gap between Rishi Sunak and Sir Keir Starmer and could cost the Tories the next election.

Tory MPs told this newspaper “the rubber is going to hit the road” when Mr Hunt brings forward a finance Bill to the Commons.

They compared the scale of backbench revolt to the outcry at George Osborne’s 2012 “pasty tax” and anger over VAT on sanitary products in 2015.

MPs have been outraged to hear ministers are considering lowering the threshold at which employees pay the 45p rate of income tax from £150,000 to £125,000, scrapping the triple lock and increasing levies on dividends and capital gains.

Despite his bullish attitude to Tory resistance, the Chancellor is understood to be considering concessions to backbenchers concerned about the effect of tax rises on small businesses, and may cancel a planned increase of business rates in line with inflation.

Officials are drawing up plans to increase the rates by a lower percentage

or extend relief on the tax to sectors that rely most on large premises, such as hospitality and retail venues.

Business groups met Mr Hunt on Friday to warn against a rise in corporation tax from 19 to 25 per cent and a freeze in a VAT threshold that amounts to a stealth tax on smaller companies.

One senior Tory backbencher said: “Everyone’s forgotten about the voice of SMEs. Tax increases are going to hit their bottom line hugely, so there is a lot of anxiety about that. If you’re trying to balance the books off the backs of people that are providing economic growth, who are the life support of the country, we’ve got problems.”

A former Cabinet minister said there is a “broader concern” about how the Conservatives differentiate themselves from Labour if they can no longer be considered a party of low tax.

“If I shut my eyes I don’t see any difference between Hunt, [Sir Keir] Starmer, Sunak and [Rachel] Reeves,” they said. “It’s all the same thing.”

Analysis shows the average inheritance tax bill is on track to almost double in the time the Tories have been in power, having gone from £166,000 in 2010 to £215,652 in 2019-20.

The Treasury and Downing Street will this week attempt to convince rebel MPs that departmental spending cuts represent a return to small-state Conservatism following years of high spending on the pandemic response. In an interview with The Sunday

Times, Mr Hunt warned that the cost of Liz Truss’s energy bills package was equivalent to “an entire second NHS” and hinted that the average energy bill could rise by £600 as he reduces universal support for billpayers.

The tapering of support is likely to come alongside more targeted measures for pensioners and vulnerable groups, but average bills could rise to between £2,800 and £3,100 from April.

Comparisons with the Tory rebellion over the “pasty tax” may worry Mr Hunt and Mr Sunak.

Mr Osborne was forced to reverse his plans to uprate VAT on hot takeaway food after opposition from Tory MPs, some of whom represented Cornish constituencies.