Tory "Furore" Looms If Spring Budget Doesn't Shift the Dial
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt (Alamy)
5 min read
Conservative backbench "furore" awaits Prime Minister Rishi Sunak and Chancellor Jeremy Hunt if next week's Spring Budget does not go far enough to satisfy their long-standing desire for tax cuts.
On Wednesday afternoon, Hunt will present the House of Commons with his highly-anticipated Spring Budget, and volatile Tory MPs on the benches behind him will be listening extra carefully.
While all fiscal events are major occasions in the Westminster calendar, next week the stakes will be higher than ever for the government, with Tory MPs in general agreement that it could mark a pivotal moment for the Conservative party in its bid to avoid a catastrophic defeat to Labour at the next general election, which must be called before the end of this year.
One former Cabinet minister said if the Government's updated economic agenda doesn't "shift the dial" in the opinion polls, then it will be time to accept that being booted out of Government is a forgone conclusion.
Hunt used last year's Autumn Statement to whet the appetites of backbenchers who were hungry for tax cuts by reducing National Insurance by two per cent. But while Tory MPs welcomed the move, they warned they would only be fully satisfied if further reductions followed in the Spring.
One senior Conservative predicted there would be a backbench "furore" next week if Tories feel Sunak and Hunt had not gone far enough to lower taxes — which despite the steps taken in the Autumn Budget, remains on course to reach its highest level in the post-war period.
But with the economy still flailing, Hunt's options remain limited, leaving him torn between whether to announce further reductions to National Insurance contributions, or instead target income tax for a headline Budget announcement that will keep his Tory colleagues on side.
Conservative MPs who are pushing hardest for tax cuts believe reducing income tax is a more appealing choice for voters – especially after Autumn's National Insurance cut, which came into effect just months later on 6 January, failed to trigger a notable boost for the Tories in the opinion polls.
The cost of living remains the most important issue for the public as they consider how they will cast their next vote, and Downing Street believes the most likely route to an unlikely electoral recovery for the Tories is if come polling day, voters genuinely feel their financial situation has improved as a result of Government action. Sunak has indicated that the election will be held in the latter half of 2024.
New data shared exclusively with PoliticsHome paints a gloomy picture of how people are currently feeling about their personal finances. The results of an opinion poll carried out by More In Common earlier this month suggest that over half of people in Britain feel they do not have enough money to spend on luxuries due to ongoing cost of living pressures.
When over 5,000 people were asked how well off they felt, over a third (33 per cent) said they didn't have enough money for luxuries, while seventeen per cent said they "can only just afford my costs and often struggle to meet ends meet". Six per cent of people told More in Common they often have to go without essentials like food and heating.
Thirty four per cent of respondents said they were "relatively comfortable" financially, while seven per cent said they were very "very comfortable".
According to Luke Tryl, UK Director at More in Common, the organisation's recent research has found a "direct link" between financial insecurity and the swing against the Tories in the polls. Among people who voted for the Conservatives at the 2019 general election, those who report being in a precarious financial position are more likely to be planning to vote for a different party next time.
"The most financially insecure Tory 2019 voters have swung more dramatically away from the Conservatives and less than half (45 per cent) of those previous Tory voters who say they can only just afford their costs and often struggle to make ends meet would still vote Conservative if a general election was called tomorrow," he told PoliticsHome.
But while economic realities will be front and centre on Wednesday, as will the politics of how Hunt's announcements will impact both main parties.
The government is expected to use the Spring Budget to continue its bid to make life for opponents Keir Starmer and Shadow Chancellor Rachel Reeves as difficult as possible. Tax cuts announced late last year were predicated on what the Institute for Government think tank has described as "implausible" future cuts to public spending, giving an incoming Labour government a major headache when it comes to funding the already-strained public sector.
PoliticsHome understands that as part of their effort to raise the funds needed to pay for tax cuts, Sunak and Hunt are considering options that would amount to essentially copying Labour policy, backing Starmer and Reeves into a corner.
The Financial Times reported on Thursday that the Treasury was considering scaling back, or even scrapping, non-dom tax status — a move that would be expected to raise several billion pounds to fund tax reductions before the next general election, as well as effectively steal the Labour Party's main stated source of revenue-raising.
It would be a bold political move given Hunt has previously criticised calls to reform that particular tax status after it was found to have benefited the Prime Minister's own wife. But the fact that it appears to be on the table at this late stage indicates how integral to changing Tory fortunes the Spring Budget is seen to be by those in Government.
The FT story left figures in Labour HQ feeling puzzled, wondering why ministers had potentially revealed their big plan a week before Hunt's statement, and giving Reeves' shadow team time to prepare. Labour insiders who spoke to PoliticsHome were sanguine about the possibility, insisting that it wouldn't cause much disruption to the party's plans.
There are many Conservative MPs who believe that Hunt and Sunak are so determined to deliver as many tax cuts as possible before judgement day that next week's Spring Budget may not be the last fiscal event before the next general election. Under the scenario being discussed in Westminster, the Government would announce more tax cuts in a further fiscal event in the Autumn before finally sending the country to the polls.
More despondent Conservative MPs fear that nothing that happens next week, nor anything the government does between now and election day, will help the Tory party avoid defeat. One former secretary of state complained: "The public has already stopped listening."
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