Jeremy Hunt’s Budget plans signal political turmoil ahead

The sheer variety and scale of the tax hikes being canvassed are remarkable, says Sean O’Grady

It is as if the chancellor had asked for a list of things his backbenchers would find most offensive (Getty)

Though it may be recalled with a slight shiver, Kwasi Kwarteng’s ill-fated mini-Budget was delivered only six weeks ago. It feels longer, almost a lost age. As chancellor, Mr Kwarteng unveiled the largest programme of tax cuts since 1972. Now, with the Treasury under new management, there is much talk of raising taxes. His successor, Jeremy Hunt, has already reversed most of Mr Kwarteng’s measures and dismantled his “plan for growth” – the proposed investment zones being the latest to be ditched. But Mr Hunt, if the rumours are to be believed, wants to raise much more money and feels unencumbered by any manifesto commitments – or even traditional Conservative sensitivities. And, again unlike Mr Kwarteng and Liz Truss, Mr Hunt seems intent on further public spending cuts.

There will be political trouble ahead.

No doubt much of this is the usual process of managing expectations, but the sheer variety and scale of the tax hikes being canvassed are remarkable. It is as if Mr Hunt had asked for a list of things his backbenchers would find most offensive: freezing income tax thresholds for years longer; raising the rates, including restoring the 50p rate scaled back by George Osborne a decade ago; reducing tax relief on pension contributions for higher earners; further limiting the tax-free lifetime limit for a pension pot (albeit at more than £1m); higher taxes on dividends and capital gains; permitting more increases in council tax; and, a particularly radioactive zone, raising inheritance tax. Given that Mr Hunt inherits a situation where the national tax take is running at a 70-year high, it suggests that even if only a few of his ideas come true, that slice of the national cake will soon be up to wartime levels.