The Tory right demands tax cuts for the rich. Britain can’t afford them – but naturally, they’re on their way

The chancellor should know better. One of the reasons he has more money coming in is that he has frozen tax bands. Therefore higher wages mean far more people are paying tax – and paying higher tax. This trend is set to continue, as one J Hunt has announced that the freeze will continue for years. 

And the government is still borrowing very large amounts of money as it heads into what is very likely going to be a recession or near-recession, with falling house prices, rising unemployment and mortgage misery. 

With public sector net borrowing still at £4.3bn last month – that’s £3.4bn more than in July 2022 – any tax cuts will need to be financed by borrowing even more. That should be enough to rule out reducing tax.

But there are two things that go against that sensible course of action. First, there is now only around a year until the next election and second, the government is 25% behind in some polls. 

The chancellor knows what he is expected to do by his party and its media supporters – he will have to cut tax cuts before the election, no matter what it costs Britain.

My best guess is that he will target inheritance tax, which is deeply unpopular with those who have to pay it. 

The fact that inheritance tax is fair, could be made even  fairer and only hits very small parts of the population, most of them having made money on untaxed property wealth, is apparently irrelevant. The rich backers of Tufton Street think tanks hate it because they have to pay it, and so the whole taxation agenda is skewed by its propaganda machine.

The deeper problem is quite simple: this country has an addiction to unaffordably low rates of taxation. 

Since Nigel Lawson slashed taxes for the rich in the 1980s, it has been held that the country can always afford low tax, as well as a highly functioning NHS and other public services and well-funded armed forces and infrastructure. The fact that the overall tax take under Margaret Thatcher actually rose and that those headline giveaways were funded by North Sea oil revenues which were squandered, is never mentioned. 

Now British voters expect and get tax cuts when the country can no longer afford them. They expect headline tax cuts even when the government is raising other taxes much higher. They expect tax cuts even when telling polling organisations that they want better schools, hospitals and roads.

Meanwhile the interest paid by the government on its debt is now the highest on record and there is much more borrowing to come. The list of things the government desperately needs to spend more money on is endless.

But instead of doing the right thing – dampening expectations of cuts and spending more to fix broken Britain – the right will win. 

Some pathetic, unaffordable, headline-grabbing giveaway ahead of the election is inevitable.