Tax cuts aren’t the magic bullet Boris Johnson thinks they are

They are the Tories’ oldest friend: when in trouble, press button T for tax cuts, writes Andrew Grice

Johnson’s energies would be better devoted to helping people through the immediate cost of living crisis (Getty)

Tax cuts are now seen as the magic bullet that will miraculously transform Boris Johnson’s standing with the voters and Conservative MPs, unite his warring party and save his skin.

They are the Tories’ oldest friend: when in trouble, press button T for tax cuts. Although Johnson and Rishi Sunak will dial up the rhetoric in a joint appearance next week, they will talk mainly about axing regulations for business to spur growth. They are less likely to trumpet the hike in corporation tax from 19 to 25 per cent next April, which the chancellor may have to soften. Ministers expect he will come under irresistible pressure to fast forward the 1p cut in the basic rate of income tax from 2024 to next April.

Badly weakened by Monday’s confidence vote, Johnson has little option but to talk up the tax cuts demanded by the cabinet and backbenchers alike; 17 Tories did so yesterday.

Liz Truss was quick out of the traps, leaving Sunak running to catch up. Even if would-be successors lack the courage to move against Johnson by resigning, they want to show some ankle to Tory MPs and party members. The Tory conference in October will be fun; remarkably, at last October’s gathering, Johnson still walked on water in the eyes of grassroots activists. This year he might be sinking amid a beauty parade of those who would be king or queen.

Although the impact of this April’s national insurance rise will be softened next month, the public knows the tax burden is at its highest level in 70 years. It’s happening largely by stealth: a four-year freeze in tax allowances will raise £21bn due to higher than expected inflation, while Sunak will hand back only £6bn next month.

Johnson’s energies would be better devoted to helping people through the immediate cost of living crisis rather than grabbing headlines about future tax cuts. A temporary cut in VAT would help. But Sunak resisted it in last month’s mini-Budget; he knows temporary can become permanent and believes the Tories must somehow cling on to their fiscal responsibility label. The intense pressure Johnson is now under will make that much harder; Sunak won’t be able to prevent borrowing from rising in the two-year countdown to the election.

Johnson should ignore advisers urging a tough disciplinary line against MPs who did not support him in Monday’s secret ballot, including an estimated 13 ministers and parliamentary aides. Johnson needs to rebuild bridges, not destroy them. If he tries to “stamp his authority” on his party, as the hardliners want, he might end up stamping on his own foot. He is in a much weaker position than when he withdrew the whip from 21 pro-EU MPs in 2019. I doubt he will offer Jeremy Hunt, who came out against him on Monday, the chancellor’s job, as some advocate.

But it would be clever to offer ministerial posts to Hunt and Tom Tugendhat; if they refused (as they well might), some colleagues would think less of them. The offer would show Johnson reaching out rather than retreating into an ever-shrinking medieval court.

A former cabinet minister who remains loyal to Johnson told me: “I didn’t think he was in trouble before the [confidence] vote, but I can’t see how he can survive now.” Although he will soon announce policies on housing and childcare, Tory MPs worry, as one put it, that they can’t see “where the good news is going to come from.”

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It’s also hard to see how Johnson could survive a second confidence vote; even more Tories would have voted against him on Monday if they had known so many of their colleagues were going to. We can expect another vote in the autumn, after the 1922 committee changes the rule saying there cannot be one for 12 months.

His critics don’t see how Johnson can lead the party into the election. Just one of many reasons: how could the four out of six Scottish Tory MPs who opposed him publicly this week urge people to vote for him? Monday’s huge revolt would also make it impossible for Johnson to use his Commons majority to overturn any punishment recommended by the privileges committee inquiry into whether he lied to parliament. We now know there could be 148 Tory votes against him. Even if 50 did not rebel in public, Johnson would still lose a Commons vote by about 380 to 260.

The PM’s biggest headache is that his internal opponents are not a bloc like the Eurosceptics who brought down Theresa May and cannot be bought off with policy sweeteners. The revolt is not against Johnson’s policies but his personality. His character is not going to change, as even he acknowledges. As his former communications director Will Walden told the BBC’s Panorama programme, Johnson once admitted to him: “You know I am never going to change. You know I am who I am.”

His problem is that his MPs know too.