No. 10 is in no rush to call an election

Ahead of the Budget, Rishi Sunak and Jeremy Hunt met MPs for drinks in the Prime Minister’s parliamentary office to try to temper expectations. The Chancellor informed those present that, while he is a low-tax Conservative, he is not a magician. Yes, lots of MPs want him to slash taxes to revive the Tories’ standing in the polls, but he can’t escape reality. In other words, spending is too great and has to be paid for. No Tory can ignore that basic fact.

As one government figure puts it: ‘Calling an election during a recession? Genius’

This is why the Budget he announced on Wednesday fell short of some of his MPs’ expectations. Rather than delivering the income tax cut many had hoped for, Hunt went for the relatively cheaper option of reducing National Insurance by 2p. This will affect 27 million people from April. When combined with the previous cut to NI in the Autumn Statement, the slash is worth £900 to the average earner. The earlier freezing of tax thresholds will mean many people still don’t feel better off – but that’s not a point Hunt wanted to dwell on.

Treasury figures say the UK now has the lowest combined basic rate of tax – NI and income – since 1975. The worry, however, is that the overall tax burden will still be near a postwar high and that cutting NI means the Tories don’t have an offering for retirees, a core voter group for the party. When Hunt addressed backbench MPs, he conceded that the party had received no political credit for last November’s NI cut, which raises the question: why would they this time around? ‘National Insurance is necessary but not sufficient,’ says a senior Tory. ‘Income tax is the totemic thing – there will be a lot of disappointment around.