Tory MPs are desperately hoping that a surprise spring economic recovery will allow Jeremy Hunt to alter his tax-raising plans, amid warnings that the chancellor’s autumn “stealth tax” announcement will extinguish the party’s election hopes.
While concerns have already been raised on the right of the party over the scale of the £25bn tax rises announced by the chancellor last week, figures from across the party said “emotional exhaustion and mental” had mitigated a larger immediate reaction.
However, senior Tories warned Hunt would face serious pressure to rethink some of his tax increases on middle workers in his spring budget. Some blamed “excessively pessimistic” forecasts from the Office for Budget Responsibility (OBR) for Hunt’s gloomy statement. Others simply hope that inflation will fall faster than expected in the spring, allowing Hunt to reshape his plans.
“Tory MPs are giving the new leadership a chance, but I think the spring budget needs to be more positive,” said one influential MP. “Inflation is expected to peak soon, so things could look better.” Another said: “The OBR has been overly pessimistic. They could be right, but there is room for it to go higher, in which case there is room for maneuver. I am convinced that inflation will fall more significantly in the year coming from what people think.”
It comes as a new Opinium poll for the Observer reveals Labor has a narrow lead in the economy. While 31% believe a Labor government led by Keir Starmer would be better at managing the economy, 30% opt for a Conservative government led by Rishi Sunak.
Almost half (49%) describe their current financial situation as “coping”. Only 25% say they are comfortable, while 25% say they are struggling. Overall, Labor maintains a clear 17-point lead over the Tories in the poll, which was taken immediately after the Autumn Statement.
Hunt’s package included spending cuts and tax increases amounting to £55bn, with the tax burden rising to a post-war record of 37% of GDP. Privately, Tory MPs voice concerns about “stealth taxes” dragging people into paying higher rates of tax, more people paying inheritance tax, a reduction in tax-free income from dividends and a reduction of tax credits on capital gains. Others are worried about a cut in investment in real terms, particularly in red-walled areas.
Many share those concerns, but a mix of relief, exhaustion and an uneasy truce among party factions has muted public criticism. “It’s emotionally and mentally draining on behalf of many colleagues,” said one veteran MP. “It is what it is now. We’ve exhausted all other options. Prime ministers have come, we’ve gotten rid of them. In 44 days we’ve gotten rid of them. We’ve had rebellions in this, rebellions in that. From fact, we’ve run out of money. We have a front bench that has gravitas and that makes the pill easier to swallow. There was a general sense of relief from the Tory benches that at least it was done competently.”
Another said: “Hunt was really good under the circumstances. I feel like there’s a bit of a lull in my game right now. How long it lasts, we’ll wait and see. We’re almost relieved to have big decisions they’re making, though not We like these decisions.”
However, the truce is awkward. An ally of the chancellor replied: “Tax cuts will not reduce inflation.” Some on the right talk about the tax burden. MPs Esther McVey, Richard Drax and John Redwood have already expressed their concerns.
David Jones, the former cabinet minister, told the Observer: “I am concerned about what is being proposed. There is nothing in this claim for growth. If we don’t encourage growth, we are consigning people to paying more tax indefinitely high.
Archie Bland and Nimo Omer take you through the top stories and what they mean, free every weekday morning
Privacy Notice: Newsletters may contain information about charities, online advertisements and content funded by third parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply.
“The turn of phrase that was used before the statement was that those with the broadest shoulders will carry most of the burden. It strikes me that those who will carry most of the burden will be those with income middles. It’s the narrow middle again.”
Another imminent fuel duty showdown looms. It is expected to rise by 23% this year unless Hunt takes steps to slow it down, but that would require extra spending that it can barely afford. Former Home Secretary Priti Patel is understood to be among those seeking a freeze until the next election.
Others are even more pessimistic about the party’s plans, with one former minister raising doubts about Sunak’s future as leader if Labor continues to lead by more than 20 points in the polls.
“The country is run by two losers,” they said. “Hunt lost to Boris and Rishi to Liz – no wonder we’re in trouble. This couple couldn’t even win the members vote. Both millionaires who don’t understand normal people so god help us when we have to face the people in an election. If he doesn’t go ahead he will go after the locals and we’ll try again. The party won’t accept a 20 point lead for Labor. It has to be under 10 by the local [elections]”.