Tories signal tax and pensions pledges could be scrapped

The Conservatives have hinted that they could drop two key economic policies from their election manifesto, paving the way for higher taxes and squeeze on pensioner incomes.

Prime Minister Theresa May

Chancellor Philip Hammond suggested a Tory pledge not to raise taxes, national insurance or VAT could be abandoned, while the Prime Minister refused to say whether she will keep the current pensions “tripe lock” in place.

Theresa May revealed that a commitment to spend 0.7% of national income on foreign aid “will remain” despite opposition from parts of her own party.

At a meeting of the IMF in Washington, Mr Hammond said he would prefer to have more “flexibility” in managing the economy. The Chancellor was forced to abandon plans increase in national insurance for the self-employed a week after his first budget after coming under pressure to stick to a 2015 manifesto commitment.

He told the BBC: “All chancellors would prefer to have more flexibility in how they manage the economy and how they manage the overall tax burden down (rather) than having to have their hands constrained. But what we put in the manifesto will be decided in the next few days and we will publish that.”

At a campaign event in her constituency, Mrs May dodged a question on the future of the pensions triple lock, which sees pensions rise annually by the highest of inflation, average earnings or 2.5% each year.

The Prime Minister said: “Pensioners today are £1,250 better off as a result of action that has been taken. We were very clear about the need to support people in their old age, and that’s exactly what we’ve done.”

Labour reiterated its commitment to the triple lock, with Shadow chancellor John McDonnell claiming the Tories were “abandoning older people”. Liberal Democrat MP Alistair Carmichael said pensioners “should now realise that their pensions are not safe in Conservative hands”.

Charities welcomed Mrs May’s comments that the Tory foreign aid pledge “remains and will remain,” but she said more work would be done to ensure the UK’s aid budget, set to reach £15 billion by 2020, is spent effectively. The SNP said pressure from its MPs had forced the Prime Minister to make the commitment.