The chancellor, Jeremy Hunt, has hinted he would cut taxes for higher earners if the Conservatives are re-elected, saying they disincentivised people from working harder. As both parties began to set out their economic plans on the first weekend of campaigning, Labour’s Rachel Reeves also said she wants taxes on working people to be lower, and promised never to “play fast and loose” with public finances. She said she intended to lead the “most pro-business Treasury in our history”. In an interview with the Telegraph, Hunt said “distortions in the tax system” on earnings between £50,000 and £125,000 “disincentivised people from doing what we need, which is to work, work harder”.
He also suggested the Tories would seek to end the effective 60% rate on incomes between £100,000 and £125,000 as the tax-free personal allowance tapers off. The Conservatives would seek to correct these distortions if the party was given another five years in government, he said. He also said he would go further in reducing employees’ national insurance contributions after two cuts in the past six months. “Our priority will be taxes that boost growth. So that can be business taxes that boost investment,” he said. “But it’s also taxes on work, which is why our national insurance cuts will fill about one in five vacancies across the economy. And it’s taxes that disincentivise saving, because if we want to have more investment in the economy, we need to be saving more.” Hunt described inheritance tax as “pernicious” and “profoundly anti-Conservative”, but he refused to say a pledge to cut it would be included in the Tories’ election manifesto. “I hope it’s something that over time a Conservative government would be able to look at,” he said. The chancellor was reported last year to be considering cutting the headline rate of inheritance tax from 40% to 20%, paid on estates valued above £325,000 a person. He also said another Conservative government would help people to get their “foot on the housing ladder”. “We would love to offer more support to people buying a house for the first time,” he said. “We’ve got record numbers of people doing that, but nonetheless, we recognise that finding the money for the deposit is challenging.” An “unsteady” property market had made support difficult in the past 18 months because of the threat of negative equity, where falling house prices leave families living in a property worth less than their mortgage. It hadn’t been possible “to introduce schemes that help first-time buyers in the context where there’s a possibility of property prices going down,” he said. “But that is changing now.”
In a direct appeal to Tory voters via an article for the Daily Mail – given front page treatment by the rightwing paper – Reeves attacked the Conservatives’ economic record over the past 14 years. “No one is going to give a box of matches back to the arsonists whose burnt the house down,” she wrote. “I know it is not enough to tell you why the Conservatives have failed. You rightly want to know why you can trust us and the difference we will make for you and your family. “Let me start with a very simple promise: I will never play fast and loose with your money. I worked as an economist at the Bank of England and in financial services before entering politics. “I know what it takes to run a successful economy.” Her first step would be “to deliver economic stability with tough spending rules so we can grow our economy and keep taxes, inflation and mortgages as low as possible”, she wrote. “I do not believe you can tax and spend your way to growth, and I didn’t come into politics to raise taxes on working people. Indeed, I want them to be lower.”