Tories hope ‘subtle’ Budget will help them avoid electoral ‘oblivion’

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Jeremy Hunt’s Budget was described in advance by one cabinet minister as “nuanced, quite subtle”. For Tory MPs looking for a political game-changer, that sounded ominous.

Ultimately Hunt delivered a significant personal tax cut — 2p off national insurance — and pushed back the cliff-edge at which middle Britain sees its child benefit withdrawn once one parent earns £50,000.

He was cheered as he sat down after promising more jobs, more growth and lower taxes — all achieved, he said, without threatening further cuts to public spending beyond the next election.

The big question facing Tory MPs is whether the Budget will head off the risk of “oblivion” — as one MP put it — facing Rishi Sunak’s party at the next election, with recent polls putting the Labour opposition 20 points ahead.

While the initial reaction of Conservative MPs was generally positive, there was glum acceptance that whatever Hunt said, it might not be enough to turn around their fortunes. “People have stopped listening to us,” lamented one.

The Budget, which combined tax cuts with a challenge to Labour to say how exactly it will fund its spending plans, is a pivotal moment, and Sunak will be scanning the polls anxiously to see how it lands.

Hunt’s upbeat rhetoric about how Britain’s economy has turned a corner — although it is still officially in recession — will cheer some Tory MPs, but a fatalistic gloom has settled over many at Westminster.

At a private pre-Budget meeting Hunt conceded to Tory MPs that cutting national insurance by 2p in his Autumn Statement passed many voters by, even though an average of £40 had been added to January pay cheques.

“He essentially said that he’d introduced one of the biggest tax cuts in history and nobody had noticed,” said one MP at the meeting. Hunt and Sunak will hope that this time around the measures will have a greater effect.

Hunt’s argument is that the 4p cut in national insurance since November is worth an average of £900 and that it maps a clear route down “the long path” to lower taxes, a different track to the one that Labour would take.

Some Tory MPs believe income tax should have been cut rather than national insurance. “People don’t really understand national insurance,” complained one.

However, Hunt doubled down on his strategy, backed by Sunak, in arguing that reducing national insurance meant cutting a tax on work and would ultimately help the economy grow faster.

The chancellor said eventually the Tories would seek to get rid of the levy altogether, even though senior Tories admit that cutting income tax would be more popular with voters.

Some Tories, remarkably, still hanker for the kind of economic risk-taking that toppled Liz Truss’s shortlived administration. Lord David Frost, who endorsed the Truss government’s disastrous tax-cutting “mini Budget”, said Hunt’s 2p national insurance cut amounted to “fiddling while Rome burns”.

Since the first tranche of Hunt’s national insurance cut came into effect in January, Tory fortunes have slumped further, leading to dark chat among Conservative MPs that the party is facing a “zombie apocalypse”.

Labour remains convinced that Sunak will use the Budget to pave the way for a surprise May 2 general election, even if close allies of the prime minister say that prospect is “vanishingly small”.

An Ipsos poll published this week found Tory support had fallen to a record low of 20 per cent, the worst rating for the party since the company began its poll in 1978, suggesting a potential Labour landslide.

Sunak’s personal ratings are also diving, recording minus 43 in a recent Deltapoll. Against this bleak backdrop, many Tory MPs believe the prime minister will not risk an election now. “Why would he sack himself?” asked one.

The argument for a May 2 election — in the minds of Labour strategists at least — is that over the coming weeks Sunak can expect better economic news, with inflation falling towards the Bank of England’s 2 per cent target.

There is also hope in Downing Street that at least one flight carrying asylum seekers to Rwanda can take off next month, something Labour accepts will be greeted by Tory supporters as a feat akin to “the moon landing”.

After local elections on May 2, in which the Conservatives expect a hammering, Labour and Tory MPs believe that Sunak will face more party unrest and potentially more calls for a change of leader.

The prime minister has until March 26 to decide whether to request a dissolution of parliament and trigger a general election. The omens are not promising. A recent Survation poll suggested the Liberal Democrats are ahead in Hunt’s own Godalming and Ash seat.

The chancellor has repeatedly insisted he wanted to do “the right thing” in his Budget, but his own political career — and those of many of his colleagues — could partly hang on whether voters warm to the measures contained in his red box.