Jeremy Hunt said he was inspired by Margaret Thatcher only nine years into her reign. Photo: Paul Grover for the Telegraph
It's the kind of observation you'd expect to hear from one of the Chancellor's political opponents – perhaps someone on the right of the Conservative Party, expressing his frustration at the ever-increasing tax burden.
But this week Jeremy Hunt himself admitted in an interview with The Telegraph that the British “have come to the limit of how much they are willing to raise their taxes.”
In an interview with The Telegraph.
In an interview with , he admitted that he was unhappy with the overall tax burden, and was also dissatisfied with the level of financial burden that was forcing millions of workers into higher tax bands.
Indeed, the Chancellor said it was a “moral duty” – leaving as much money as possible in people's own pockets.
But after laying out those lofty ideals, he went on to elegantly set the stage for what is likely to be minimal tax cuts in this week's Budget, saying: “I also want to grow the economy.”
British people are now are facing their heaviest tax burden since World War II. Taxes as a percentage of GDP will reach a new post-war high of almost 38%, up from 33% before the pandemic, according to the latest official forecast from the Office for Budget Responsibility (OBR) in November.
Mr Hunt insisted he did want to cut taxes, but added: “We are only going to do it in a responsible way and in a way that supports economic growth. The most unconservative thing I could do would be to risk the public finances. If you look at some of the great reforming chancellors, they cut taxes when they could. But they didn't take a risk on the economy, and I certainly won't.”
Refusing to go into detail about whether taxes would be cut by the next election, he said: “I'll be honest with people on Wednesday that it's a long way to go. to achieve tax cuts.” Asked what he would say to Telegraph readers who feel the tax burden is incredibly high with no end in sight, he said: “Stick to the plan and we'll get those taxes down.” . But there are no easy ways.
“You don't need a chancellor who pretends you can achieve everything in one go. Margaret Thatcher, the prime minister who inspired me to get into politics, cut taxes for ten years.
“But the biggest tax cuts she introduced actually only came after she had been in office for nine years. The reason Nigel Lawson's great tax reform budget of 1988 was so historic was because when he did it, people knew the tax cuts were permanent.
“So I will be responsible for public finances. This is the main reason people vote Conservative. They trust us with their money and they trust us with the economy. And I will demonstrate that responsibility in my approach to public finances.”
No sweeping tax cuts
Mr Hunt has gone some way to explaining why he will not pursue the sweeping tax cuts called for by many within his own party. and among the general public.
Speaking exclusively to The Telegraph, he confirmed he had received the final official forecast from the OBR ahead of the Budget. The Chancellor received one letter on Wednesday and a further and final message on Friday.
“This process takes several weeks and you get economic forecasts, which are part of GDP and inflation, and also budget forecasts, which, what they expect will happen with tax revenues,” he said.
“And in general, they went against us. We do not have the same positive outlook that we had at the end of the Autumn Statement.
“So this will be a Budget in which we highlight the progress we have made in bringing down inflation, and the importance of taking responsibility for the country's finances because that it is fundamentally unconservative to finance everything you would like to do by borrowing.” money for future generations. Therefore, we will take a very disciplined and responsible approach to all decisions we make.”
Gloomy forecasts
Many Tory MPs privately believe the OBR's dire forecasts are having too much influence on Treasury decision-making. But even they admit there is no easy way around this – especially given what happened when former Prime Minister Liz Truss tried to deliver her notorious mini-budget without an accompanying OBR forecast.
This was one of them. a number of factors – along with the sacking of the chief finance minister and the swift promise of further tax cuts – that spooked markets and ultimately led to the demise of her premiership after just 49 days in office.
Mr Hunt, the man , appointed by Ms Truss in her final days in office to clean up the financial mess following the sacking of his predecessor Kwasi Kwarteng, stressed the importance of the OBR and its forecasts.
How the Chancellor will make working people feel they are being rewarded and isn't it a punishment of paying ever higher taxes?
“It was the right thing to do to help families get through the pandemic and cost of living crisis,” Mr Hunt said. “And as a result, we have recovered from the pandemic better than many other European countries. And the unemployment rate is historically low at 3.9%.
“But you have to pay off your debts, and that was a lot of money. And I don't think this should be a permanent change in the tax burden. As I said earlier, I firmly believe that the most successful countries are those with lower overall tax rates.”
Mr Hunt said tax cuts financed by borrowing “are not real tax cuts”. He said his budget would “show people the direction to go.”
He went on to say he wanted to “be honest with people that tax cuts should be permanent” rather than cutting taxes by tricking national governments. accounts.
He said: “If you cut taxes by increasing your borrowing, that is not a true tax cut. It's essentially a tax cut where you're passing the bill on to future generations, and that's wrong.
“The fact is, interest rates go up and down month after month because of the decision that's been made. Bank of England. But when your taxes change, it's permanent.
“And that's why you need a smart, responsible approach that gives people confidence that what you're doing is making a permanent difference.”“But I want to make it clear to people that the fundamental difference in British politics has always been and always will be: Labor governments spend more and tax more, and Conservative governments spend more wisely and tax less.
“And this will be a great dividing line in British politics. in this election, as in all elections in my life.”
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