Senior Conservative MP backs higher taxes to boost public services

Posted On: 
28th June 2017

A key minister in David Cameron’s government has called on Theresa May and Philip Hammond to increase taxes to fund higher spending on public services. 

Oliver Letwin a rethink on the public sector pay cap was "getting close"
Credit: 
The House magazine

Oliver Letwin, who had a key role in drawing up policy under the previous prime minister, said the Conservatives should not ditch their timetable for reducing the deficit but had to acknowledge the public was “much more concerned” than in 2010 and 2015 about public spending.

The Conservative MP said schools, hospitals and social care should get priority on any extra money, but added that the time for rethinking the 1% cap on public sector pay rises was “getting close”.

Social Mobility Commission says there is 'hunger for change' on economic divide

Labour to force Queen’s Speech vote in bid to end cuts to emergency services

Support grows for higher taxes to fund public services

His intervention comes after the British Social Attitudes Survey found that support for higher taxes to boost state spending was at its highest level since 2004.

Labour will also put forward an amendment to the Queen’s Speech today which calls for the pay cap on public sector workers to be lifted.

Mr Letwin said that amendment was an effort by the Opposition to “play politics” – but he joined a growing number of Tories who said the country’s economic trajectory had to be reconsidered in light of the recent general election.

He said he agreed with Chancellor Philip Hammond that voters had grown “weary” with the cuts to spending.

“People were much more concerned at this election than they had been at the previous two about spending on schools, spending on health, spending on social care – crucial public services which now seem to be under strain,” he told the Today programme.

“We need to maintain as a country, for the sake of all of us, credibility with investors… We need to be sure that, when the next downturn comes – and who knows when that might be – we are well protected rather than exposed and that means we need to continue the programme of restoring fiscal credibility and getting back to balanced budgets and that is very important.

“But that is compatible with easing up a little, not a great splurge but easing up a little on spending on key public services if one is prepared to bite the bullet of carefully judged and carefully presented tax increases.”

He cautioned against any further relaxation in the timeframe for eliminating the deficit – a process which has been ongoing since the Conservatives first came to power in 2010 – and said that the burden of extra taxation could not be absorbed only by the rich.

“It may well be that in one way or another a large number of people will have to pay a little more tax if we’re to retain the trend towards reduced deficits and yet spend a bit more.”

He added: “It’s perfectly possible both to reduce the deficit – to continue reducing the deficit – and to increase somewhat public spending if you’re prepared to engage in some well-judged and careful tax increases.”

Labour is likely to lose the vote on the amendment to the Queen’s Speech after the Conservatives secured the support of the DUP’s ten MPs for crucial votes.

But Mr Letwin, who as Cabinet Office minister oversaw pay settlements in the public sector, said the argument for scrapping the 1% pay rise ceiling was gaining currency.

“Sooner or later there will need to be some movement on the rate of increase in public sector pay,” he said.

“We’re getting close to the point at which the huge increase in public sector pay compared to private sector pay which we inherited in 2010 is levelling out. And I have no doubt that at some point or other we will need to look at that.”