Tory backbenchers dismayed as leaders fail to commit to lower taxes
‘The Wets won’: That was the scathing verdict from a Tory MP after Jeremy Hunt revealed his budget last week. Despite efforts by backbenchers, business leaders and leading economists to persuade the Chancellor to change course, his budget confirmed what they had all feared: that Britain’s tax burden is now on course to set a new post-war record.
Not only has he pushed the first increase in the corporate tax rate since 1974 from 19 percent to 25 percent, but he has also committed to keeping tax thresholds frozen until 2028, meaning millions will be dragged into higher income tax bands. At the same time, he made no promises about when taxes would be reduced.
“It’s really depressing,” said a veteran backbencher, as he conceded, “We lost the argument with the chancellor. The corporate tax and the secret tax hikes have all gone through. It’s all pretty grim.”
The MP’s dejected mood was typical of backbenchers The Telegraph spoke to, many of whom had spent several weeks lobbying Mr Hunt ahead of the budget. As it turned out, her arguments had fallen on deaf ears.
“The Chancellor’s failure to commit to a tax cut is disappointing,” said a senior Tory MP. “We all recognize the restrictions he is working under but we need to open clear blue water before the general election.”
“high tax party”
Indeed, the day after the budget, the Tories found themselves in the bizarre position of being attacked by Labor for being a “high tax party”. Rachel Reeves, the Shadow Chancellor, said: “The Conservatives have become a high-tax party because they have become a low-growth party…there is so much potential in the UK and yet the government is not realizing it.”
But despite their impassioned pre-Budget pleas, the low-tax rebels admit there is now “no prospect of serious rebellion” within the party.
One said: “There’s no point pretending we can fight fights we can’t. I think the conservative faction will meekly submit. The Wets won – they took control of the party. The voters are quite passive – that’s the tragedy. We are now caught in high tax mania.”
The feeling that even voters have given up hope of lower taxes seems to be confirmed in the Red Wall – a key battleground for the next election – where the budget drew a relatively muted response from voters.
Two focus groups conducted by Public First with working-class participants in Wolverhampton and Rotherham showed that while the budget had ‘made it’, it had encountered ambivalence.
“Get Worse Before It Gets Better”
A middle-aged participant in Rotherham said the government was “putting caps on things for which we are already paying a fortune”. “I don’t think there was anything special about it for me,” she added.
On the economy, an elderly voter in Wolverhampton said somberly: “I just have a feeling it’s going to get worse before it gets better.”
Both the expansion of free childcare and the “favorable draft” when serving beer were welcomed.
The freeze on heating costs and the extension of the energy price guarantee were also well received by the participants, who all voted for Tory in the last election but were now undecided.
However, the latter two measures were seen as the bare minimum the government could do to help with the cost-of-living crisis.
“fuel prices, [the cost of] Oil is coming down but it never seems to be passed on to the customer,” said an elderly male voter in Rotherham. “Our fuel bills are absolutely ridiculous at the moment.”
Giveaway for the rich
The factions were also unperturbed by the decision to abolish the lifetime pension, which was seen as a giveaway for a wealthy minority.
A Wolverhampton voter said: “The pension will only go to the rich because who the hell can save a million pounds for their pension over their lifetime?”
Meanwhile, the rising tax burden is being used as a weapon by the Liberal Democrats ahead of local elections in May.
On leafy ‘Blue Wall’ seats in southern England, where Conservatives traditionally dominate, the party has been sending out targeted advertisements publicizing the number of times the local Tory MP has voted for tax increases.
Ahead of the Lib Dems’ spring conference in York this weekend, Sir Ed Davey, the party’s leader, told The Telegraph: “We find many ex-Conservatives unable to believe that the Conservatives have raised taxes on hard-working families in the middle in a livelihood crisis.”
taxes on families
“I’ll give you an example. John Redwood, the so-called Thatcher MP, has voted four times in this Parliament to raise taxes on families.
“We’re going to tell the people of Wokingham about John Redwood. He might talk about tax cuts – he votes for tax increases.”
A Government source said: “The spring budget has reduced the overall tax burden for the rest of Parliament. It included a significant £27bn in tax cuts for companies – on top of the £14bn cut in corporate taxes in the autumn statement.
“We have the collectively most generous capital deduction system of any advanced economy in the world and the lowest level of corporate tax in the G7. Our plan is already helping to halve inflation, boost the economy and reduce debt.”