Conservative MPs Welcome Autumn Statement But Demand More Tax Cuts
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt (Alamy)
Conservative MPs who are pushing for lower tax have cautiously welcomed Jeremy Hunt's Autumn Statement, but they stress that it must be followed by further tax cuts at the Spring Budget to limit damage to the Tory party at the next general election.
"It's a step in the right direction," said one Tory MP who has been especially keen to see tax cuts.
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt had been under intense pressure from a number of Tory backbenchers to slash taxes, despite the pair having been keen to restore optics of caution following the economic chaos unleashed by Liz Truss and Kwasi Kwarteng's own tax cuts late last year.
There has long been frustration among Conservatives with the size of the overall tax burden, with the Office for Budget Responsibility (OBR) projecting earlier this year that it was on course to hit its highest post-war level as a percentage of GDP.
On Wednesday, the ORB said the overall tax burden was still on course to hit a record high, forecasting that it will reach 37.7 per cent of GDP by 2028/29. This is despite Hunt announcing in the Autumn Statement that a two per cent cut to National Insurance, reducing the level people will pay from 12 per cent to 10 per cent, would come into effect in January 2024.
But Tory MPs who spoke to PoliticsHome following Hunt's House of Commons speech were pleased by the announcements and hoped that they would serve as a prelude to further tax cuts at the Spring Budget.
"This is pretty good given the economic circumstances," said one veteran Conservative.
Former Cabinet minister Jake Berry, who with over 30 other Conservative MPs had vowed to withhold their support for the government's Autumn Statement if it led to higher taxes, said he was "delighted" to see that ministers had complied with their pledge.
Tory enthusiasm was not dampened by the OBR's projections, with one senior MP arguing the watchdog had a tendency to be overly “pessimistic”. Sources close to Hunt himself were keen to stress that the body had previously forecast that the UK would enter a recession, which has not yet happened.
Tory MPs also believe that the Autumn Statement could help Sunak "open a gap" with Keir Starmer's Labour Party by forcing it to decide whether it supports the cut to National Insurance and other policies announced this afternoon, like the prospect of out-of-work people having their benefits cut off if they refuse to undertake mandatory work placements.
Speaking at a briefing hosted by think tank Bright Blue, John Penrose, the Conservative MP for Weston-super-Mare, argued that the effect of the National Insurance cut would be immediately "visible" for voters.
"Tax cuts are things which are immediately visible in your first paycheck after effect," he said.
However, one former secretary of state who is pleased by the Autumn Statement admitted it is unlikely to shift the dial for the Conservative party against an economic backdrop that is set to stay gloomy for years to come.
The senior Tory said that while people would have "more money in their pockets" in January as a result of the National Insurance reduction, there are tens of thousands of households set to move onto higher mortgage rates in 2024.
In its report accompanying the government's Autumn Statement, the OBR said households were set for the biggest reduction in living standards since records began. The independent body also lowered its estimations of how much the economy would grow in the coming years.
Snap polling by Savanta found that two thirds of people (67 per cent) supported the government's decision to cut National Insurance, while over half (58 per cent) expressed broad support for the package of measures announced by the Chancellor.
However, more people said the government's plan for the economy wasn't working (49per cent) than those who said it was (28 per cent).
Over a third of respondents (35 per cent) said an Autumn Statement delivered by Shadow Chancellor Rachel Reeves, compared with 24 per cent who said it would have been worse. Twenty four per cent told Savanta that it would have made no difference.
One Tory MP lamented that the Conservatives would be in a stronger position in the opinion polls had last year's Autumn Statement been similar to today's announcement, rather than the chaotic mini-budget announced by former prime minister Truss.
Her plans for wholesale tax cuts spooked investors, unleashed turmoil in the markets, and ultimately led to her being ousted from No10 just six weeks after replacing Boris Johnson.
"This was the statement that Kwasi [Kwarteng, the ex-chancellor] should have done a year ago," they told PoliticsHome.
Kwarteng himself was sanguine about Hunt's tax measures. "I'm someone who would have liked to have gone further," he told Times Radio. "... But I had my chance, as it were."
Additional reporting by Zoe Crowther.
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