Tax cuts for workers ‘an option’ says Hammond – as UK enjoys ‘improved public finances’
The Chancellor said the UK was enjoying an “improved state of public finances” despite ongoing Brexit uncertainty and said tax cuts were an option for ministers. Mr Hammond told MPs during Treasury questions in the Commons on Tuesday: “We can choose to support additional spending on public services. “We can choose to reduce the deficit more quickly. “We can choose to invest in Britain’s future. “Or we can choose to cut taxes on ordinary working families.
“Having the luxury of choice is something this country hasn’t seen for a decade.”
His comments come as former Brexit minister Dominic Raab pledged to reduce the basic rate of income tax by 5p as part of his leadership candidate bid to replace Theresa May.
The leading Brexiteer’s flagship policy would reduce the basic rate of income tax from 20 percent to 15 percent over a five-year parliament, a 1p reduction each year.
The measures will see workers on the median full-time salary of £29,600 saving £854 per year.
Meanwhile those who earn £50,000 per year will have an extra £2,000 in their pockets.
Speaking during a head-to-head debate with four other senior Conservatives, organised by the Daily Telegraph, Mr Raab said: “We should cut the basic rate of income tax by a penny each year as Nigel Lawson did in the 1980s.
“We, as Conservatives, are defending the enterprise economy and lower and middle-income aspirational working Britain.”
Mr Raab was urged to explain how he would fund his proposal, should he become the next Prime Minister, with critics suggesting he will need another £25billion to make it a reality.
He defended his proposal by suggesting his idea could be made possible by closing or merging Government departments – but analysts fear this will only cover a small amount of the money needed.
Mr Raab’s proposal was criticised by Mr Hammond, who attacked the leadership hopeful for proposing to “undo a decade of hard work”.
He said: “Fiscal responsibility is a proud boast of Conservative governments, and I know that, in the coming months, my colleagues will want to protect that reputation – and so will resist the ever-present temptation to write cheques the country cannot afford.
“We must not undo a decade of hard work by the British people by making unfunded commitments that would send our national debt soaring; leave the economy vulnerable to future shocks; burden future generations and waste billions on interest payments.
“People must know they can trust Conservatives with the public finances.”