UK Budget: Chancellor Jeremy Hunt must resist tax-cut calls from Conservatives' 'Liz Truss wing' – Scotsman comment

Amid pressures to increase spending on health and defence, significant tax cuts would be a foolish mistake

Jeremy Hunt appears to be feeling the pressure over taxation from the Conservatives’ unreconstructed ‘Liz Truss wing'. Her disastrous, but mercifully short, term of office has clearly failed to persuade hard-right ideologues that tax cuts are not some kind of economic magic wand to be waved with abandon.

Why else would the Chancellor feel the need to reiterate his warning to the Cabinet earlier this week that, while he wants to “lighten the tax burden”, there is little scope to do so and people’s expectations must reflect the need to govern in “a responsible and sensible way”?

His comments come after the International Monetary Fund warned against tax cuts in the UK, talking of the need to modernise the NHS, invest in the net-zero transition, and boost economic growth, among other spending pressures, while at the same time “preventing your debt levels from increasing”.

Liz Truss may have resigned as Prime Minister but many Conservative MPs support her way of thinking about economics (Picture: Carl Court/Getty Images)

No one wants to pay more tax and overall taxation is at historically high levels, but significant cuts at a time when our public finances are in such a state would be foolish. After almost bouncing back from Covid, UK gross domestic product (GDP) has been flatlining. Cut taxes too enthusiastically and we may pay dearly for it.

It will be felt in even more shambolic public services but it should also be remembered that government spending on health, transport, education and other areas has a significant economic effect. For example, if trains do not run, the economy suffers. If the NHS does not treat people in a timely manner, they may not be able to work and, again, the economy suffers. In addition to spending on health, there is also a need to increase defence spending because of the threats posed by Russia, Iran and, potentially, China.

So Hunt is right to tread a fine line on taxation, spending and government debt. Even if a major global conflict is avoided, the UK still needs to be more resilient to global shocks to the financial markets. Ideologically driven tax cuts of a size sufficient to appease the hard-right of the Tory party may simply precipitate another Truss-style calamity.