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Evening Standard
Evening Standard
World
Rachael Burford and David Bond

‘Show there is path to lower taxes’, London MPs tell Chancellor ahead of spring budget

London Tory MPs met with the

(Picture: Sir David Evennett MP)

London Tory MPs have told the Chancellor he should “show there is a path” to lower taxes during his spring budget.

Jeremy Hunt met with the capital’s Conservative MPs ahead of his financial statement on March 15 to discuss economic issues impacting Londoners.

Former cabinet minister Theresa Villiers told the Evening Standard: “Everyone recognises that there are limits to what he can do on tax at the moment, because of the huge costs of the pandemic and the impacts of the war in Ukraine. I think we would all like to see the Chancellor show there is a path to lowering taxes in the future.”

The Chipping Barnet MP also stressed that childcare costs were a barrier to parents getting back into work, particularly in London.

“Almost every MP has recognised that,” she added.

Government borrowing hit a far higher than expected £27.4 billion last month, jumping by £16.7 billion year-on-year, figures released by the Office for National Statistics showed on Wednesday.

But with inflation forecast to fall later in the year and hopes rising that the economy may have avoided a recession in the second half of 2022, Mr Hunt has been facing calls from some to cut taxes to boost growth.

Lord Gus O’Donnell on Thursday said Mr Hunt would be right to reject any demands for tax cuts from the Tory back benches.

The Former Cabinet Secretary said Britain cannot afford its current rate of borrowing.

“We need to get the borrowing down,” Lord O’Donnell told LBC. “So I’m with the Chancellor that actually if we want the public services that I think people are demanding of a rich society like ours, then you have to pay for them one way or the other.

“And doing it through taxation is probably the best way.

“The point about tax cuts is that they have to be affordable.

"There is a sense in which you know, you can't be a country with Scandinavian style, wonderful public services and very low US-style taxes. It just doesn't add up.

“That means that you borrow a lot, which means that we get to the situation we're in now, where debt interest, the interest we're paying on our debt is the second largest government spending programme. That's crazy.”

Lord O’Donnell also called for “give and take” from the unions and ministers to resolve ongoing public sector strikes.

“What you've seen in a number of public services is declines in the real pay levels over the last 10 years," he added. So there is a problem there. If the gap between the public and private sector gets too large and you can't recruit and retain the people you need in the public sector. So there needs to be a bit of give and take on all of this. I would say we need to find a way through these by both sides, negotiating sensibly and coming up with some answers. It's not easy.

"The private sector is finding that there are massive labour shortages at the moment. And so in the private sector wages are growing at around seven per cent and you're looking at public sector wages it's a bit more like three and a half. That gap is not sustainable over the longer term.

“So we're going to have to find a way through it. That's another reason that why I think, Jeremy Hunt the chancellor is saying: ‘look, guys, you know, I haven't there's no money for these tax cuts. You're going to have to wait.”

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