Theresa May is preparing a tax sweetener to appeal to working-class voters as part of her attempt to win seats in traditional Labour areas, Government sources have said.
Sir Michael Fallon, the Defence Secretary, suggested that the Conservatives will use their manifesto to take lower paid workers “out of tax” entirely.
His comments suggest that Mrs May is considering an increase in the personal allowance, the point at which people start paying income tax. It currently stands at £11,500.
A Government source said: “There will be a sweetener for working people as part of the bid to pick up votes in Labour seats. Our instinct is to reduce taxes, there will be an offering.”
Sir Michael signalled yesterday that the Conservatives will abandon David Cameron’s “tax lock” pledge, under which he pledged not to raise national insurance, income tax or VAT.
He said that the Conservatives are wary of committing to too many “prescriptive” targets in the manifesto after Philip Hammond, the Chancellor, said he wanted greater flexibility.
Asked if the Tories would recommit to Mr Cameron’s pledge, Sir Michael said: “The manifesto will certainly make clear which side of this argument we’re on – it’s Labour governments that increase tax, it’s Conservative governments that take the lower paid, in particular, out of tax.”
Mrs May has said taxed will rise jobs will be cut and debt will spiral if Labour reaches agreements with other groups to block the Tories.
Underlining warnings about the impact of a "coalition of chaos", she insisted the parties "remain determined to disrupt the result" of the EU referendum.
In an article for Welsh newspaper the Western Mail, she said: "Our Labour, Lib Dem and Nationalist opponents - Plaid Cymru here in Wales and Nicola Sturgeon's SNP in Scotland - are already seeking to disrupt our negotiations, even as 27 other European countries line up to oppose us.
"That approach can only mean one thing - uncertainty and instability, bringing grave risk to our growing economy with higher taxes, fewer jobs, more waste and more debt."