Michael Howard is under pressure from senior Conservatives to promise more ambitious tax cuts after independent economists he used to validate his plans warned that the tax burden was set to rise under a Tory government.
Senior backbenchers have spoken out after the Institute for Fiscal Studies, the respected think-tank quoted by the Tory leader to authorise his economic blueprint, told the Financial Times that, in spite of Mr Howard's repeated promises of £4bn in tax cuts, rising earnings meant the Conservatives would, under current plans, preside over an overall increase in taxation as a share of national wealth. The comments risk overshadowing Mr Howard's pledges tomorrow of tax cuts for middle-income earners and help on inheritance tax. Frustration is growing in Conservative ranks about the party's failure to make a breakthrough in the polls, with one senior Tory saying Mr Howard was under pressure to come up with a “big idea”.
During the first week of the election campaign, Mr Howard has studiously avoided going beyond his pledge to cut specific taxes by £4bn in their first budget. He fears any more would allow Labour to accuse them planning to cut public services.
But David Heathcoat-Amory, a former Treasury minister and member of the Commons Treasury select committee, said the £4bn package was part of a larger “programme” and that, in his personal view, subsequent Budgets should provide further tax cuts. “My own political choice would be to ensure that the tax burden doesn't rise,” Mr Heathcoat-Amory told the FT, adding that the Tories could provide additional tax cuts by saving more than the £35bn set out by David James, the Tory wastebuster. “We are going to abolish the regional assemblies but not the regional development agencies. I can see that that's another body that wants money. I believe that for a whole parliament on the expenditure side there's plenty we could do not on services but on the quango state. It gives you further scope either to spend more on frontline services or if you want on taxes,” Mr Heathcoat-Amory added.
Howard Flight, the deputy chairman, was sacked by the Tory leader last month for telling a private meeting that “the potential for getting better taxpayer value is a good bit greater” than Mr James suggested.
Robert Walter, another Tory on the Treasury select committee, echoed Mr Heathcoat-Amory's “hope” of further tax cuts. “If we know we can deliver £4bn now then hopefully if the economy does expand then I would have thought that would be possible.” The IFS said the tax burden would rise whichever party wins the election, because earnings were growing faster than inflation and more taxpayers would be dragged into higher income tax bands.
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