The Conservatives may drop a 2015 pledge not to raise income tax, national insurance, and VAT, Chancellor of the Exchequer Philip Hammond has suggested.
The promises not to raise tax were made under former Prime Minister David Cameron in the party’s 2015 manifesto. But just two years on, Hammond has told reporters the pledge is hampering government efforts to erode the budget deficit, and may, therefore, be dropped from the new manifesto, due to be published in two weeks’ time.
Speaking at the International Monetary Fund’s spring meeting in Washington, D.C., on Friday, Hammond said: “It was self-evidently clear that the commitments that were made in the 2015 manifesto did and do today constrain the ability to manage the economy flexibly.”
He added: “I’m a Conservative I didn’t come into politics because I believed in higher taxes. I believe in lower taxes. And I want to see Britain as a high skill, high unemployment, high growth, low tax economy. I say low tax, I mean sensibly taxed economy.
“So I’m not in the business of having some ideological desire to increase taxes. But I also think we need to manage our economy sensibly and sustainably.
“We need to address the remainder of our deficit. Get our fiscal accounts back in to balance and it’s self-evidently clear that the commitments that were made in 2015 manifesto did and do today constrain the ability of the government to manage the economy flexibly.”
His comments come as Prime Minister Theresa May announced her party will uphold its pledge to spend 0.7 per cent of GDP – equivalent to around £13 billion last year – on foreign aid despite widespread concerns about misspending and voter opposition.
Mrs. May said: “Let’s be clear. The 0.7 per cent commitment remains and will remain.”
The policy priorities cast Mrs. May’s Government firmly in the mould of her predecessor David Cameron, whose efforts to liberalise the Conservatives were unpopular with the right of the party.
His chancellor, George Osborne, who on Wednesday revealed he would be stepping down from politics, has welcomed today’s announcements, tweeting: “Recommitment to 0.7 per cent aid target very welcome. Morally right, strengthens UK influence & was key to creating modern compassionate Conservatives.”
The UK Independence Party (UKIP) leader Paul Nuttall said: “Philip Hammond says he has no ideological desire to raise taxes, but what is crystal clear is he that has no desire whatever to cut wasteful spending.
“For a Chancellor to line up new tax rises on the same day as the prime minister has signalled the foreign aid bonanza will continue is deeply disappointing.
“The truth is that there is ample scope to cut out waste from public spending while protecting key services and avoiding tax rises for hardworking Britain.
“And if the Chancellor does want to find extra revenue, he should target multinational corporations that do not pay their way rather than ordinary working people.”