Tory backbenchers dismayed as leaders fail to commit to lower taxes
“The wets have won”: That was the damning verdict of one Tory MP after Jeremy Hunt unveiled his Budget last week. Despite the best efforts of backbenchers, business chiefs and leading economists to persuade the Chancellor to change course, his Budget confirmed what they had all been dreading: that Britain's tax burden is now on course to hit a new post-war record.
Not only did he press ahead with the first increase in the headline rate of corporation tax since 1974 from 19pc to 25pc, but he also committed to keeping tax thresholds frozen until 2028, meaning millions will be dragged into higher income tax bands. At the same time, he failed to make any promises whatsoever about when taxes would be lowered.
“It is really depressing,” one veteran backbencher said, as he conceded: “We lost the argument with the Chancellor. The corporation tax and the stealth tax increases have all gone through. It is all rather grim”.
The MP’s downbeat sentiment was typical of backbenchers The Telegraph spoke to, many of whom had spent several weeks lobbying Mr Hunt ahead of the Budget. Their arguments, it turned out, had fallen on deaf ears.
“The Chancellor’s failure to commit to lowering tax is disappointing,” one senior Tory MP said. “We all recognise the constraints he is working under but we need to open up clear blue water ahead of the general election.”
'High tax party'
Indeed, the day after the Budget, Tories found themselves in the bizarre position of being attacked by Labour for being a “high tax party”. Rachel Reeves, the shadow chancellor said: “The Conservatives have become a high tax party, because they've become a party of low growth... in Britain, there's so much potential and yet the Government is not seizing it."
But despite their impassioned pleas ahead of the Budget, the low-tax rebels admit there is now “no prospect of any serious rebellion” within the party.
One said: “There is no point pretending we can fight fights which we can’t. I think the Conservative parliamentary party will meekly acquiesce. The wets have won - they have taken control of the party. The electorate are pretty passive in this - that is the tragedy. We are now trapped in a high tax delusion.”
The feeling that even voters have given up on the hope of lower taxes appears to be borne out in the Red Wall - a key battleground for the next election - where the Budget drew a relatively muted reaction from voters.
Two focus groups carried out by Public First involving working class participants in Wolverhampton and Rotherham showed that while the Budget had “cut through”, it had been met with ambivalence.
'Get worse before it gets better'
A middle-aged female participant in Rotherham said the Government was putting “caps on things that we’re already paying a fortune for”. “I don’t think that there was anything in there that was particularly for me,” she added.
On the economy, an older female voter in Wolverhampton glumly opined: “I’ve just got the feeling it's going to get worse before it gets better.”
The expansion of free childcare and “draught relief” on beer served in pubs were both welcomed.
The freeze on fuel duty and extension of the energy price guarantee likewise went down well with the participants, all of whom had voted Tory at 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 get passed on to the customer,” said an older male voter in Rotherham. “Our fuel bills at the moment are absolutely ridiculous.”
Giveaway for wealthy
The groups were also unimpressed by the decision to abolish the lifetime pension allowance, which was viewed as a giveaway for a wealthy minority.
A Wolverhampton voter said: “The pension one is only going to benefit rich people because who the hell can save up a million pounds pension over their lifetime?”
Meanwhile, the rising tax burden is being weaponised by the Liberal Democrats in the run up to the May local elections.
In leafy “Blue Wall” seats in the South of England where the Conservatives have traditionally been dominant, the party is sending out targeted advertisements publicising the number of times the local Tory MP has voted to increase taxes.
Speaking ahead of the Lib Dems’ spring conference in York this weekend, Sir Ed Davey, the party’s leader, told The Telegraph: “We’re finding a lot of former Conservatives can’t believe the Conservatives have shoved up taxes on hardworking families in the middle of a cost of living crisis.”
Taxes on families
“I’ll give you an example. John Redwood, so-called Thatcherite MP, he has voted four times to hike taxes on families in this Parliament.
“We’re going to let the people of Wokingham know about John Redwood. He may talk a game of cutting taxes - he votes for tax rises.”
A Government source said: “The spring Budget reduced the overall tax burden for the rest of the parliament. It included a major £27 billion tax cut for businesses - in addition to the £14 billion business rates cut in the autumn statement.
“We have the joint most generous capital allowance regime of any advanced economy in the world, and the lowest level of corporation tax in G7. Our plan is already helping to halve inflation, grow the economy and reduce debt.”