Grant Shapps backs income tax cuts for working families

Shapps said the Government was committed to increasing spending on defence
Shapps said the Government was committed to increasing spending on defence - ELLIOT FRANKS

Grant Shapps has backed income tax cuts as he says voters want to keep more of their earnings.

The Defence Secretary indicated his support for tax-cutting measures that helped working families amid signs that the Downing Street and the Chancellor Jeremy Hunt are cooling on plans to slash inheritance tax.

His comments come ahead of a week in which Prime Minister Rishi Sunak is attempting to push the economy and investment in skills to the top of the agenda after securing the Commons passage of his Rwanda Bill despite rebellions by 60 MPs.

It emerged at the weekend that Jeremy Hunt’s hopes of being able to announce a tax-cutting bonanza have been boosted by estimates that his headroom for cuts has increased by £10 billion as a result of lower than expected Government borrowing costs.

Speaking on Sky’s News show with Trevor Phillips, Mr Shapps said the Government was committed to increasing spending on defence “when conditions allow,” but said this had to be balanced by the need for tax cuts.

“I argue for greater spending [on defence] … but I also think that it is true to say that people do want to see more of the money that they earn after a very difficult period through COVID and this war in Ukraine. People deserve some of that money back,” he said.

Inheritance tax cut

A survey of 30 Tory backbenchers by The Telegraph found they supported income tax cuts over inheritance tax cuts by a four-to-one majority.

Supporters of axing or halving inheritance tax – two options that have been floated – argue that it will create a clear dividing line with Labour which have indicated that they would reverse it. However, critics warn that it could backfire with allegations that it largely benefits the wealthy with capital assets.

In an article for The Sun on Sunday, Mr Sunak also appeared to indicate that the focus is likely to be on income tax and National Insurance in the Budget on March 6. “Where we can, we will always prioritise tax cuts to put more of people’s money back in their pockets,” he said.

In a separate article in the Mail on Sunday, Mr Hunt vowed to emulate Nigel Lawson, the tax-cutting chancellor whose economic policies led to the Big Bang in financial markets. “The most dynamic economies tend to be places with lower taxes,” he said.

Meanwhile, Martin Lewis, the money-saving expert, wrote to the chancellor urging a series of measures – top of which was raising the threshold at which middle-income families lost their right to child benefits.

Mr Lewis said the freezing of the £50,000 and £60,000 thresholds since 2013 had led to hundreds of thousands more families seeing their child benefit reduced or cancelled because one of the parents had gone over them. “I’m sure it would be a very popular measure if it were addressed in the budget,” he said.

The money-saving campaigner also urged Mr Hunt to cancel the lifetime ISA withdrawal penalty for all first-time buyers and a ban on mid-contract, above-inflation broadband and mobile price hikes. He said English student living loans had been cut in real terms and were not enough for some to live on.

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