Jeremy Hunt has £97bn to make tax cuts, report says

Former PM Liz Truss makes her case for growth

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Jacob Rees-Mogg and allies of Liz Truss have claimed that she has been vindicated by a new report which suggests Jeremy Hunt could make almost £100 billion in tax cuts in his Budget and still meet his main economic objectives in paying off debt. The report by the NIESR has also seen renewed criticism of the Office of Budget Responsibility (OBR), whose findings undermined Ms Truss’s economic plan before her downfall.

In its findings, the NIESR report stated: “A combination of higher revenue and lower spending, together with the more favourable outlook for GDP and interest rates, means that the Chancellor has a large amount of fiscal space ahead of his budget on 15 March.

“We estimate this to be £166.0 billion (5.1 percent of GDP) for his deficit target and £97.5 billion (2.9 per cent of GDP) for his debt target.”

The conclusions will fuel demands by Tory MPs that Mr Hunt abandons a 6p increase in the Corporation Tax rate taking it to 25p in the £1 above Britain’s competitors in Europe.

He will also be under pressure to find other tax cuts and avoid further increases in items like fuel duty which would hit people in the pocket during the cost of living crisis.

Yesterday 45 MPs, mostly Conservative, attended the All Party Parliamentary Group (APPG) on fair fuel to show their support to a campaign opposing a proposed 14p hike in fuel duty.

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But the NIESR report has also led to claims that Ms Truss may have been right over the high growth, tax cutting economic policy which saw her forced out after just 49 days.

One of the criticisms at the time was a decision not to run the mini Budget by the OBR’s whose subsequent forcasts were critical of her policies.

On seeing the NIESR report, a source close to Ms Truss said: “What does that tell you about the accuracy of the figures produced by the OBR which everyone takes as gospel and which were used to box in her and Kwasi [Kwarteng] as to what they could do in the mini Budget?”

Jacob Rees-Mogg, who was Ms Truss’s Business Secretary, also was critical of the OBR after seeing the NIESR estimates.

He also pointed out that inflation has in the short term helped bring down government debt.

He said: “This is an important study which shows how inflation helps the government’s finances in the short term.

“It also exposes the limitations of the error prone OBR whose baleful inference is doing so much damage to the UK economy.”

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