Jeremy Hunt’s most important Budget announcement today won’t be something that’ll take effect in the next few hours or weeks. What Tory MPs are looking for above everything else is a commitment to reducing the tax burden and to the Conservative party going into the next election as a low-tax party. They have largely accepted Hunt and Rishi Sunak’s arguments that big tax cuts can’t come yet, and instead are calling for a ‘do no harm’ Budget.
The trouble is that their definition of ‘do no harm’ includes not pressing ahead with the planned rise in corporation tax from 19 to 25 per cent. The Chancellor is expected to defend that rise when he speaks today, arguing that the decisions the government has taken so far have delivered ‘stability and sound money’.
Both Johnson and Truss are quite happy to destabilise the current leadership
The Chancellor is going to try to soften the blow by announcing businesses can offset the entire cost of investments in infrastructure against their profits. But a refusal to set out a change in direction on the tax rate itself will not go down well with members of a number of Tory factions, including the Conservative Growth Group, the Northern Research Group and the European Research Group – as well as the Boris Johnson Opportunism Group, with the former prime minister already making noises about a tax rise that was announced when he was prime minister, by a chancellor he had appointed.
That chancellor is now the Prime Minister, and both Johnson and the PM in between him and Sunak, Liz Truss, are quite happy to destabilise the current leadership with regular critical interventions on economic policy that get Tory MPs excited.
Hunt wants this to be a back-to-work Budget, announcing more help with the costs of childcare, and various pension changes that will prevent experienced and valuable workers from leaving their jobs earlier for tax reasons. But the political attention is on tax cuts and preventing more tax rises, not spending giveaways. And if he doesn’t pay heed to that, the Conservative party will go back to the work it knows best: fighting.
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