Plenty of headroom for tax cuts

I was critical of OBR accounting for  inflation linked linked government debt. They said the  extra repayment costs on index linked bonds  from higher inflation  were like monthly cash payments though the government does not send the bondholders cash each time prices go up. .  Now I can enjoy the reverse process where the accounting system to correct the figures going forward will record big drops in the costs of government interest payments as inflation falls away. In the year to November 2023 the OBR charged the government accounts  £50bn with inflation top ups to bonds that do not become liable until the bonds are due for repayment. This year beginning with December 2023 with inflation down from 10% to 4% the debt interest figure will tumble. It went below zero in December for the inflation adjustments.

It looks as if on their accounting system government interest charges and spending will benefit from a fall of more than  £30bn in the year ahead, assuming inflation now falls from 4% to 2% as forecast by the Bank of England. Tax revenues are predictably disappointing a bit compared to OBR forecasts as the higher rates and frozen thresholds bite. The Treasury/OBR model still attributes too much revenue growth with tax rises and fails to credit tax rate cuts with more revenue yet this often happens with the main capital and income taxes.

We need a growth strategy which must include tax cuts. We now know there will be more than £30 bn extra headroom as the interest payments plunge. The government should cut energy taxes as a priority. Getting inflation down more quickly would mean even  bigger falls in debt interest and curb inflationary increases in public spending across all the budgets. Cuts in taxes on small business and the self employed will boost output and competition. Income tax should also be brought down by taking more people out of the higher tax brackets they are being dragged into.


  1. Lynn Atkinson
    January 24, 2024

    The Chancellor has no credibility now proposing a conservative policy. He was obdurately refusing to even consider it a matter of weeks ago.
    The front bench team should resign their seats and stand down. If they are replaced by more fools proven wrong on major issues, like Truss for instance who would have the Zelensky ‘government exiled in the U.K., making us a target for Russia, still no go.
    We need CLEAN, CONSERVATIVE, CREDIBLE hands across the Front Bench NOW and a tax reset to trump Lawson! We also need a government and House which understands what their job is – governing by consent – and which is prepared to do it rather than sub-contract to any willing entity.
    The Tory Chairman stands no chance of holding his own seat! Has no idea how to run and election (he thinks the computer does that) and has less clue as to what a conservative is.
    This can’t go on or ever happen again. When Farage is the best option you are way below sewer level.

    1. MFD
      January 24, 2024

      On the news last night we were told the Chancellor had been given unseen money and were ask what we thought it should be spent on ???
      No thought of paying of some of the debt they put is in. These stupid men are like five year old children , spending all the cash on trash in the first shop they see!

    2. Nigl
      January 24, 2024

      I share some of your sentiment. Your solution, cabinet resignations en masse etc are ridiculous and unachievable in any time frame let alone the run up to the election even if there were better candidates for the jobs.,

    3. Peter
      January 24, 2024

      Meanwhile on ‘Conservative Home’ Sir John Redwood has an article on the ‘high-immigration, low-growth economic model’.

      Yes, vacancies should mostly be filled by native Britons on decent wages.

      However, high immigration, legal or otherwise, shows no sign of ending.

      Native Britons, over decades, have been encouraged to have fewer children and our numbers are declining.

      Large employers, over decades, have been pandered to by government when they claim they cannot get staff. So training and pay levels are ignored. Foreigners are employed instead. The taxpayer supplements the foreigners’ wages.

      1. Mickey Taking
        January 25, 2024

        ‘have been encouraged to have fewer children’ due to ever increasing taxation!

      2. graham1946
        January 25, 2024

        The tax payer also subsidises our own people’s low wages instead of getting employers to pay the correct wages needed to live in this expensive country.

    4. A-tracy
      January 24, 2024

      Who would you make Tory Chairman Lynn?

    5. Lifelogic
      January 25, 2024

      “The Chancellor has no credibility now proposing a conservative policy. He was obdurately refusing to even consider it a matter of weeks ago.”

      Indeed, What sensible person will believe anything this tax to death, net zero pushing socialist says in the next manifesto. He is still not even trying to stick to his four remaining pledges and the 12% inflation that has actually reduced (still over double the target) was caused by him as Chancellor in the first place anyway.

      A change of leader will probably not help very much but sticking with Sunak is bound to bury the party for several terms at least. Starmer will amazingly be even worse than these dire Con-socialists have been.

      1. graham1946
        January 25, 2024

        On inflation, when it was going up it was ‘world events, nothing I can do’. When it came down it was all due to his wise actions. They really do think we are fools. They try to tell us prices are lower again – they are not, even at 4 percent it is on top of the previous lot and still going up, which is why people are struggling. Rishi has no interest in this country in my opinion. His heritage as India so he arranges for Tata to close our steel works and import from India and his wife’s mega fortune is based on India. Being PM is a good mark in his CV, that’s about it as far as I can see.

  2. DOM
    January 24, 2024

    We need mass immigration from Africa, Asia and the ME, not tax cuts. Bus them in and pack them off to every Tory constituencies so they may also enjoy the benefits of diversity like the rest of us. After all the Tories like Labour and indeed good old King Charles endorse the beauty of diversity and multiculturalism.

    1. Everhopeful
      January 24, 2024

      And then having done that, how about a spot of WAR?
      Hear the lock-step sabres rattling across the world.

      1. Hope
        January 24, 2024

        Cameron is back and bombing has started!! His side kick, Plebgate, wants to feed Africa to stop immigration!

        Meanwhile the EU has chastised Sunak for not telling it when he intends to hold an election!! JR, why is the UK in the European Political Community? Is this the forerunner to outer ring of EU that we voted to leave 8 years ago! There are channels of communication without joining EU groupings.

        Your party is determined to join and act in lock step to the EU by stealth hoping we will not notice. Time for Brexit as we voted shedding All EU laws, regs ties, get N.Ireland back, rid the nation of the border down the Irish Sea and act as a sovereign Independent country.

        Perhaps this is the real problem at Westminster fools on both sides of the Uni Party unable to govern and can only follow what the EU says. Now desperately looking at WHO so it can make decisions for them because they are incapable.

        Monty Python clip with your party at the moment- the parrot is dead. AKA Sunak for election purposes is dead as a dodo, gone, no more and you are all clinging on in the vain hope something might change. The public have made up their minds. Brexit not delivered, N.Ireland given away, fishing waters given away, mass immigration against everyone’s wishes, highest taxation yet most dire public services. Your govt back to wanting to shower the world with taxpayers money and bomb other countries to unite us! No.

        Clue of mismanagement: Sunak has given/wasted France £500 million of our hard earned taxes allegedly to stop boats knowing he was giving them (illegal immigrants) jobs, providing them 4 star hotels and never deport them!! While telling the nation it would not be fare on those who choose the legal route!! Is that not abject dishonesty? From the man who said he would serve with integrity and implement the manifesto and abandoned it!

        Sunak and Hunt are not good at economy- where have you been, reflect on all the advice you have given to them. They got rid of tax cutters from cabinet, prominent EU leavers banished. Former Tory ministers concurred your party delivered good socialist budgets!!

      2. Mitchel
        January 24, 2024

        “across the world”

        Across the elites of the western world certainly -they can see that they are doomed as the postwar settlement(“the end of history”)is swept-or possibly blown-away.

        Good riddance!

    2. Timaction
      January 24, 2024

      And having imported them take your place behind them in the queue for health, housing and dental services. Whilst we’re at it, let’s all pay more tax for the privilege of subsidising or keeping them!!

  3. DOM
    January 24, 2024

    Wanted. A hard-line Thatcherite to lead the Tory party and who works with Reform to destroy Labour. It can be done.

    1. BOF
      January 24, 2024

      We need a Javier Milei or a Victor Orban.

      1. mancunius
        January 24, 2024

        Imagine in two years’ time, people saying: ‘Britain’s such a basket-case, why can’t they copy Argentina?’ 🙂

      2. glen cullen
        January 24, 2024

        or Pierre Marcel Poilievre – leader of the Conservative Party of Canada

    2. Peter Wood
      January 24, 2024

      Yes, but who? Can’t see any competent Tory MP.
      Our host thinks there’s spare cash; how naive, with his experience. All those pressing spending departments, NHS, Net Aero, baying for more cash to waste, not to mention the Civil Service expansion plans with increased grades.
      PCP, the definition of profligacy.
      PS. We can’t even muster a carrier task force to send to the Red Sea. — Pathetic.

      1. Mike Wilson
        January 24, 2024

        We can’t even muster a carrier task force to send to the Red Sea. — Pathetic.

        What’s the latest on New Labour’s £6 billion pair of carriers? Is the second one working yet? Have they got any planes on them? What’s the point of them?

        1. Lifelogic
          January 25, 2024


      2. Lynn Atkinson
        January 24, 2024

        You are so wrong! Because you can’t comprehend political economy even explained in the simple terms JR is capable of, because he understands the subject, does not mean that he is wrong! It means YOU are wrong and should stop boasting about it.

      3. Timaction
        January 24, 2024

        The Tory’s happy to pay 5.6 million on welfare with no time limits. Balancing the books before anything else would be good. Then maybe a sovereign wealth fund?……. oops I suddenly thought I was in Norway or the middle East to help the Nation blessed with oil and gas reserves…. then back to reality with ppe uni Party fools.

        1. a-tracy
          January 25, 2024

          How much war debt was Norway in for the past century to America?
          How many social houses did they build after the war to renew their bombed housing stock?
          How much roads and national infrastructure did they need to rebuild?
          How many other countries are they asked to help with aid and military support?
          How much immigration are they dealing with, and have they dealt with?

    3. Everhopeful
      January 24, 2024

      Oh..what a good idea.
      I’m just off to the Job Centre to find one….just as likely as anywhere near Westminster.
      And no one did anything, in these oh so pc times to stop the disgusting besmirching when Mrs T died.
      They should have been arrested.

      1. Mickey Taking
        January 24, 2024

        For being disgusting over Mrs T death? What about teachers who get sacked for not agreeing to call effiminate boys sweet girls names, and girls who claim to be cats or mice – I kid you not. The world at least the UK has gone mad.

        1. Everhopeful
          January 25, 2024

          Quite right…all of it!
          But I was answering Dom who referenced a Thatcherite.

        2. graham1946
          January 25, 2024

          And of course, not just sacked, but still hiding in fear for his life is a teacher who dared show a picture and discuss certain religion’s ‘prophet’. No support from the authorities at all. Cowards, the lot of them and appeasement never ever works, they always come back for more. Now we have a midlands head being hounded for trying to stop prayer mats in her school. As I said they just keep pushing for more and more special treatment.

          1. Mickey Taking
            January 25, 2024

            Not special they just want their customs, religious festivals, laws, languages, class segregation, and able to ignore ours which is just a transplant from where they came from without the violence and poverty.

    4. Dave Andrews
      January 24, 2024

      Work with Reform, but they can’t be members of the party. That consists of Richard Tice and two yesmen. That’s right, Reform has three members only. How can you have candidates who aren’t even members of the party they stand for?

      1. graham1946
        January 25, 2024

        Actually constitutionally all MP’s should be independent, we vote for the person, not a party. When an MP gets into trouble there is a by election – they cannot say ‘that’s our seat, so here someone else we like to sit in it’. They form parties not for our benefit but to ensure election results.

    5. MFD
      January 24, 2024

      Now thats a good idea DOM, but where would no catch one of those rare fish?

    6. Donna
      January 24, 2024

      There’s no way that could happen unless and until most of the Socialists-wearing-blue-rosettes are cleared out of Parliament.

    7. Ian wragg
      January 24, 2024

      I’m hoping for Trump to win
      He will show the UK limp dumb of the major parties what needs doing. Promising jam tomorrow is past its sell by date. Full speed ahead for Nut Zero once the pesky election is out of the way.

      1. Sir Joe Soap
        January 25, 2024

        It’ll certainly be interesting to see those Lammy-Trump confrontations. Yes, this stuff will swing the pendulum here pretty quickly, as Lammy and Rayner types are exposed then ignored by the President.

      2. Mickey Taking
        January 25, 2024

        At least we might get an embarrassed laugh out of President Trump, rather than a really uncomfortable shrug out of President Biden.

    8. Lester_Cynic
      January 25, 2024

      Richard Tice’s views on Ukraine show that he’s not fit to be allowed anywhere near a position of power

      The Russians aren’t the aggressors, President Putin warned what would happen if NATO tried to establish a base on the Russian border, the Minsk agreement was an attempt to reassure the Russians that the West had no bad intentions towards Russia whilst building up their military

      I haven’t previously said that!

  4. Wanderer
    January 24, 2024

    Rather than cut income tax for higher earners, perhaps it’s better to raise the tax threshold for lower earners, if one has to make a choice between the two? I’m no economist. But isn’t it always said that they more likely to spend the extra cash in their pockets?

    Or would less income tax for the higher paid spur the vast ranks of our middle and high ranking state employees to improve their productivity? (tongue in cheek – I just think income tax is a blunt way of targeting entrepreneurs, there are a lot of taxpayers that don’t much help our country become wealthier).

    1. Mickey Taking
      January 24, 2024

      exactly! Raise the personal allowance for all by say 3k, then have a new band of say 5k @ 10% – and finally extend the 20% band by another 10k.
      It is not rocket science is it ? But then sometimes the bleedin’ obvious isn’t to those in their ivory towers.

  5. Lemming
    January 24, 2024

    Fantastic, you want to re-run the Liz Truss experiment, but even more aggressively! Please please do this, Conservatives.

    1. agricola
      January 24, 2024

      Said from the base of the cliff. Truss was a shift in financial thinking based on the Laffer curve proven theory of more government income from less taxation due to increased activity. Killed by the blob and undemocratically usurped by the current chancers. Watch out above, they could be joining you.

      1. Peter Parsons
        January 24, 2024

        The Laffer curve proven? Proven not to work in the real world. Have you heard of the Kansas experiment? Reagonomics – all reversed over Reagan’s 2 terms. Trump’s first 3 years (pre-Covid) tax cuts resulted in a 50% increase in the US national debt.

        It was the financial markets that gave their opinion on Truss’ Kami-Kwazi not-a-budget. How many City bond traders are there in this supposed blob?

        A thought experiment dreamed up on a restaurant napkin over dinner is not a “proven theory”.

        I’ll set you a task. Curves are mathematical entities. If the Laffer Curve is a real thing, you should be able to tell me the mathematical formula that describes it, and from that you should be able to calculate the point at its peak (and thus give an exact figure for this supposed mythical optimum rate of tax).

        I look forward to seeing your answer and please show your working.

        1. oldwulf
          January 25, 2024

          @Peter Parsons

          As you imply, seeking to calculate a specific tax rate which brings in the optimum amount of tax, is very, very difficult 🙂

          For example, there are too many different taxes. Also, measurement of the effect of tax rates on peoples behaviour is impossible to measure with any certainty. It seems the OBR has particular difficulty in measuring the effects of tax rates on our behaviour, which may help explain why its forecasts are generally wrong ?

          Laffer’s ideas were not new. In the 1600s Louis XIV’S minister, Jean-Baptiste Colbert, said that “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” Sensibly, Colbert did not offer a calculation nor a graph. Also, Laffer himself mentioned that Muslim philosopher Ibn Khaldun, wrote about it in the 14th-century.

          I see that the Kansas expereiment to which you refer has its own Wikipedia page. It seems there were a number of key errors made by the Kansas administration including one specific tax exemption for businesses which was widely exploited as a tax loophole. I would have thought this effect on peoples behaviour would have been relatively easy to predict !

          1. Peter Parsons
            January 26, 2024

            You make a key point about behaviour. For example, the biggest impact of the Stamp Duty holiday back in 2021 was transaction shifting. Basically, people who were planning to move over a 2-3 year timescale all deciding to try and take advantage of temporarily reduced rates all deciding to move within the holiday window instead. A similar thing happened in relation to the cut in the top rate of income tax from 50p to 45p. It was done with enough notice to allow top rate tax payers to shift income into the next tax year, and thus pay a lower rate of tax on it. HMRC’s own analysis highlights this transaction shifting occuring across different tax years.

            Similar things are also seen in differences between income taxation and dividend taxation with company owners.

            As you also say, it is also very difficult to calculate the peak of a theoretical curve, and therefore, in the real world, cutting a tax rate may result in lower revenues.

          2. oldwulf
            January 26, 2024

            Hi Peter Parsons

            Whilst I agree you may be right about transaction shifting and income shifting, I particularly had in mind the potential negative economic effects of “excessive” taxation.

            For example, an entrepreneur may look at a particular project and seek to balance the risk with the potential reward. The risk includes the likelihood of making a profit. The tax position of suppliers may increase the entrepreneur’s costs and hence the likelihood of him/her making a profit. The tax position of the entrepreneur’s potential customers may have a bearing on the entrepreneur’s market place and the selling price for the product. The tax position of the entrepreneur will then have a bearing on his/her net reward.

            At the margins, I believe “high” tax rates prevent certain projects from going ahead and will hence stifle economic activity and will reduce the multiplier effect. I accept no one has yet found a way to measure this with accuracy.

            Another example might be an employed worker who, when asked to work overtime, needs to be paid time and a half or double time, in order to give him/her a reasonable net hourly rate to compensate for increased marginal rates of Income Tax and National Insurance. Increased hourly rates of pay have the knock on effect of increasing the employer’s costs which increase the employer’s product price. Customers may or may not be prepared to pay that increased price. Hence, at the margins, the extra work may not be worthwhile and taxation/national insurance may have stifled economic activity and reduce the multiplier effect. Again, I accept that no one has yet found a way to measure this with accuracy.

        2. Mitchel
          January 25, 2024

          I fully agree with you.

          Wasn’t Trump going to eliminate the US national debt,albeit over two terms?

          Sound money is an ancient relic in the Anglo-Saxon world.

      2. oldwulf
        January 24, 2024


        Our host comments “Plenty of headroom for tax cuts”

        ….. and goes on to say “The Treasury/OBR model……. fails to credit tax rate cuts with more revenue yet this often happens with the main capital and income taxes.”
        … the Laffer curve to which you refer.

        As tax cuts are likely to increase the tax take … I’m not clear as to why we need “Plenty of headroom for tax cuts”. Having said this, I accept that the potential effect of tax cuts may be too difficult for our public sector economists to offer a forecast. However, all their forecasts are wrong anyway ….. so what’s the problem ?

        1. Bloke
          January 25, 2024

          ‘Headroom’ is a mirage.
          Duck or Grouse would be more cautious with chancers like Jeremy Hunt.

    2. Will
      January 24, 2024

      Actually, the Truss/Kwarteng tax cuts were mainly sensible – cut corporation tax, not raise it like the numpty Hunt has done etc. The big mistake was the huge bill for supporting households against higher energy prices – they should have told the grid to ignore the outrageously overpriced wind and solar, and concentrated on low cost gas generation.

      1. Hope
        January 24, 2024

        Tory subsidised households for failing to have a cogent long term self sufficient, as possible, energy policy. They decided to go for nut stupid without any idea where our energy would come from for residential or commercial purposes.

        Look at Tata steel for the most stupid act of national self harm and failing to provide national security in energy, food, manufacturing and jobs! This current Tory party is determined to harm our way of life economically, socially, culturally and rid us of our nation state through mass immigration. Silencing all dissenters with Diversity, Equality and Inclusivity rot. It is anything but. It is forcing the nation into silence to stop dissent. Uni Party must go if we want to save our nation and way of life.

      2. Lifelogic
        January 24, 2024

        Exactly. Truss should never have subsidised energy, just have ditched net zero, got fracking and charged the going market rate. People will get used to hot water bottles, extra jumpers, themal undies & heating just one room if they have too. We only got central heating in our house (and then downstairs only) when I was about 16. Before that just one room with a coal fire if cold and the odd tepid bath once a week. Never bothered me much. Meant we all (six in the family) tended to gather in the warm (and TV) room which had some advantages.

    3. R.Grange
      January 24, 2024

      It doesn’t matter what the Conservatives do, Lemming. They’re toast at the next elections. They don’t have a dynamic, charismatic person who could lead them to victory, by making Starmer look like the utter nonentity he really is. Boris Johnson had his faults, but he knew how to win public attention. He was always getting photographed in workplaces with working people in this country, and not much with globalist billionaires in places like Bali and Davos, as Sunak does. No-one on the Tory front benches has the personality or vision to lead the party to victory. Some in the media are even talking about Robert Jenrick as a potential future leader, which shows how desperate things are. He was the housing minister who back in 2018-19 announced the ‘Standard method’ formula for imposing more housing on the shires. That lost the Tories the Chesham & Amersham by-election, and probably others besides, and will lose them some more come the GE.

  6. Ian B
    January 24, 2024

    Sir John
    If we had a Conservative Government, we would have had an economy and never got to this ridiculous position. Tax cuts would be welcome but a change of Government more so.
    To recap taxes therefore costs have only recently been increased by this Conservative Government. These rises in costs caused inflation, that caused high interest rates, all were never needed if the economy had been front and center. So as we now have an election on the horizon, magic money that had been stored has been found to bribe us. Bribe us with our own money! Sunak/Hunt just freezing personal allowances at 2020/21 levels until 2028 will make us all poorer and give the Government more to squander than any sleight of hand deals going forward – that is just deceit.
    This is a page out of the poverty stricken London Mayors play book, he also has an election and suddenly money has turned up to ease the flow back into office.
    If we had a Government that knew how to control expenditure, manage the country we would have been in a different place.

  7. Roy Grainger
    January 24, 2024

    As the index-linked debt “benefit” of lower inflation does not actually generate any real money – any cash – now for the Treasury why should it have any impact at all on Hunt’s scope for tax cuts ? How do the EU countries and USA account for index-linked debt ? You have explained the way the BoE accounts for losses on QE bonds is different so I suppose this is different too. Why do they always think they know best ?

    1. Mike Wilson
      January 24, 2024

      As the index-linked debt “benefit” of lower inflation does not actually generate any real money – any cash – now for the Treasury

      The government runs on debt. Cash? Who cares about cash. It’s all fantasy economics. The nationaldebtclock shows debt growing at £5170 every second. Total at the moment is just £50 billion shy of £3 MILLION MILLION. The government doesn’t care about this burden for our children and grandchildren. All it cares about is the upcoming election. They want to stay in power so they can live the good life and one day retire on a massive pension and write their memoirs.

  8. Narrow Shoulders
    January 24, 2024

    There has always been plenty of room for tax cuts (or not tax rises). Your party just chose to spend the money on immigrants, Ukraine, diversity, net zero, EU punishment, benefits and pensions instead of letting the people who pay for government keep some of their money.

    A returned Conservative government will reverse any cuts just as much as a Labour administration will, government is addicted to spending money it doesn’t have.

    1. Donna
      January 24, 2024


      Deliberately making energy the most expensive in the G20 in order to virtue-signal to the world has led directly to closure of the Port Talbot steelworks and the loss of anything between 3000 – 6000 jobs when the knock-on effects are included …… and Sunak claims the Net Zero lunacy is not to blame.

      Since when has a truly Conservative Party thought it was the job of government to impose policies, created by one-issue obsessive Eco Nutters, which tells householders how they must heat their homes; what kind of car they can buy; what they must eat and threatens to punish them if they don’t comply?

    2. Mickey Taking
      January 24, 2024

      Think about all these added CS employees and their remuneration and pensions. Even the more recent MPs who will quietly retire and those who will be dumped soon. It all has to be paid for- and Rishi/Hunt know how!

  9. agricola
    January 24, 2024

    For me bonds are money the government should never have had, a form of living beyond their means at the expense of the taxpayer.

    If the Chancellor returns the £30Bn as a bribe for re-election it will, be seen for what it is. Yes tax thresholds need adjusting, and IHT plus stamp duty should be abolished, but if you wish to boost the economy without causing further inflation then vastly reduce the myriad of taxes associated with fuel costs to individuals and industry. Such taxes affect everyone whether you pay income, IHT,or stamp duty taxes or not. Fuel costs affect everything that is purchased, and everyone who is subsidised to purchase it. Use the £30Bn for that and the whole economy benefits, whether the Tory’s benefit electorally I question because I judge their credibility already shot.

    1. Mike Wilson
      January 24, 2024

      Bonds intrigue me.
      Who creates money in the first place? The government.
      Some people manage to accumulate a lot of money.
      Then the government decides it needs to borrow some money as it is spending more than it gets in in tax.
      So it borrows some of the money it created in the first place – and pays interest on it.

  10. David Andrews
    January 24, 2024

    You are expecting too much from the idiocracy in charge. They will invent another reason to wriggle out of tax cuts.

  11. BW
    January 24, 2024

    Increase the income tax threshold then.

    1. Neil
      January 25, 2024

      Reverse effects of the ‘fiscal drag’. The fiscal drag was deliberate, because most people do not notice it and protest.

      FD also has the effect of making the tax system more regressive which has happened relentlessly since 1979 with severe effects on some groups. I happen to think it is unjust for ex-university students to pay an effective marginal income tax rate of c.60% – incl. the effect of repaying their loans – and for Amazon to pay a reported marginal tax rate of 8%.

  12. Javelin
    January 24, 2024

    I made a comment on this site over a decade ago that young men would not fight for a country with so many immigrants. The situation has got a lot worse because they have deprioritised young men, cut the army back and institutionalised woke-think

    The number one job of politicians, agreed by all, is to protect the country from attack. The priority goes back in time to the tribal chieftains. Politicians today have not prioritised this and now the country cannot muster a real army to fight.

    If Putin or Iran pushes this into the public minds then the entire political class of Europe will be replaced and we will be in a much darker place than 1939 because the only solution will be to put the whole of Europe into reverse gear.

    Soft times create hard men.

  13. Dave Andrews
    January 24, 2024

    Tax cuts fine, but can we first cut out the waste to balance the books. If the accounts then start to show a surplus we can cut taxes and see the benefits of growth leading to even more tax cuts.
    What have we done to the next generation? All this debt with nothing to show for it.

  14. Donna
    January 24, 2024

    The Not-a-Conservative-Party should have recognised a long time ago that if it allowed (or in the case of the OBR create) Quangos which are then stuffed with left-wing, activist/group-think Oxbridge zombies it will get what it deserves.

    Blair created a left-wing Establishment: House of Frauds; Civil Service and Quangocracy …. and a University-sector which would ensure that conservative policies would be demonised and extinguished.

    In 14 years, all the Not-a-Conservative-Party has done is reinforce the institutions and therefore the policies which are leading to its own demise. But to be fair, Lord Dave of Greenshill Lobbying told us exactly what he was: Blair Mark II.

  15. Ed M
    January 24, 2024

    I agree about tax reduction. But tax reduction isn’t enough. Tax reduction is like the Financial Director of a private company cutting down on costs (and I agree, that’s essential to a successful business).

    But a successful business also requires clever, effective investment. So, in this instance, investment is required to help create Cambridge as the world’s second Silicon Valley (the US government was involved in the development of Silicon Valley, the Israeli government played a key role in helping to create Tel Aviv as a world-wide tech hub, the German government has financially helped the German car industry, the Irish government helped to create its successful high tech industry by investing in eduction etc – although the American and Israeli models were more effective overall for high tech – but the UK needs to do something unique too as each country finds itself in a unique economic situation with unique economic opportunities – as well as similar ones too).

    Billions and billions have been wasted by government over the years, when how effective a few billion would be if we helped to establish Cambridge as the world’s Silicon Valley. However, it’s really about sewing the seeds with public money and then private investment takes over and grows the seeds into a forest of high tech companies in the Cambridge area – and that could then spread to the Oxford area.

    Using the expertise of the universities and the companies already in these areas.

    So for example, developing a fast, underground train to Cambridge from London, with iconic, beautiful double-decker design – including station in Cambridge and in London (something small). Giving financial and general support to entrepreneurs to set up high tech companies. Encouraging, with some financial investment, for the young to learn how to code. Not forgetting, it can cost hardly anything for a young person to create their own software programme and then make lots of money selling it to businesses as well as to people in general.

    Something like that.

    1. Ed M
      January 24, 2024

      An underground train to Cambridge should in theory cost no more than about £5 Billion. The problem is that we lack politicians able to take financial control of public projects like this – and costs spiral out of control, thus destroying possible investing projects because we lack the talent / experience / skills to control costs (whilst China takes off ’cause its investment costs are sooo low compared to the UK).

  16. Nigl
    January 24, 2024

    Only a government desperate to buy votes would claim it has room for tax cuts when it continues to fail balance the books with our overall debt still rising.

    State spending is too high and too inefficient. Reducing that is the correct way of solving your problem but you are too weak, woke or have strong enough Ministers with proper management experience to drive it through.

    Another speech, John Hayes, talking about Civil Service but echoes of Gove years ago with no follow up.

    Even Labour is talking real sense on NHS reform, nothing from you.

    Tax cuts won’t win you the election. We need a Prime Minister not office manager.

    Ditch Sunak, or else you will lose. Take a risk with a newbie not a retread, say Badenoch albeit allegedly Gove’s ‘glove puppet’ and you might win.

  17. Ian B
    January 24, 2024

    With the State of decline forced on us, not taking more or our money is not the answer, just as off-shoring our carbon emissions does nothing. The rot is elsewhere.
    Highlighted elsewhere(The DT)
    “Replace Sunak as PM or face decade of decline under Starmer”
    It is more than that, all those that have had the collective responsibility of the front bench/cabinet in the last 14 years need to be moved aside. Those libDems that have infiltrated the party that call themselves One Nation Conservatives, need to offer themselves for re-selection.
    The Conservative Party needs to get a grip on its Party, need to have a selection process that involves those that candidates will represent. In reality need to understand that being Conservative is not being Socialist just as it is not being ‘right-wing’, its being in tune with the electorate.
    Any Conservative that has NOT had the collective responsibility as a Minister in the last 14 years would win the next election ‘hands-down’ – just look at the state of the alternatives! This Socialist spend, spend crowd are no better or just equal to the alternatives – not a better choice. How can we decline further than we would under Sunak/Hunt duo? Cause a crisis then pretend you have solved it in a heart beat no longer washes.

  18. Nigl
    January 24, 2024

    Good to see Sir David Davis continuing to pay Sunak back for his knighthood rubbishing Simon Clarkes suggestion.

    Your elites are truly out of touch with the country.

  19. Donna
    January 24, 2024

    Off topic:

    Quietly published yesterday. Does this look or sound like a Conservative Government to you? It doesn’t sound even remotely like one to me, so I won’t be voting for it.

    “The UK underlines our commitment to agreement of a new Pandemic Accord and targeted amendments of the International Health Regulations ….. The UK welcomes this week’s focus on climate and health. At COP28, leaders noted that climate change is now a health crisis, as you have said many times DG. One we can only face collectively with WHO playing a key role ……Finally, the upcoming COP on tobacco control is an opportunity to focus on a key public health issue. The UK is committed to ending the harms of tobacco and plans to introduce a new law to create the first ‘smoke-free generation’.

    1. a-tracy
      January 25, 2024

      The new generation of possible smokers won’t be smoking; they’re vaping and smoking cannabis., a walk around any of our estates now show you just how massive this upcoming problem is.

      1. Mickey Taking
        January 25, 2024

        don’t stand still too long, nor perform running on the spot, you’ll get high.

  20. Ian B
    January 24, 2024

    From the MsM
    Rishi’s give-aways of our money has meant the UK is “the only G20 country lacking a sovereign capability in ‘weapons grade’ primary steel.”
    “A lot of steel in the UK is used for automotive manufacturing, and that requires primary production, so where are we going to get it from if we don’t have any domestic capability?”
    The man, the so-called self-appointed PM is so anti UK it is unreal, spends our money thinking that like himself we all can get more without a real job.
    List all the Countries and Foreign entities he has give our taxpayer money to, then list all those UK tax domain, tax paying companies that recycle UK taxpayer money back into the system he has given our money to. Then list all the places he has distributed our money without a concern for a return, a service, a product – Socialism at its best. No Labour Government even Blair/Brown was ever as prolific in spending our money.

    1. Ian B
      January 24, 2024

      Rishi – don’t forget to answer to your President, Ursula von der Leyen. She needs to know when the election is so to know whether it is you or Stamer should direct her Laws and Regulations too – you have retained all her other diktats. She knows like we know you stopped the UK leaving her Empire and knows she is still your Boss.
      Then CCHQ wonder why they have a mess and a catastrophe of their own making on their hands

  21. Walt
    January 24, 2024

    Do we spend £30bn on pre-election tax cuts that will fool no-one, or on our country’s infrastructure and military equipment?

    1. Ian B
      January 25, 2024

      @Walt +1 The latter
      This Conservative Government needs to learn what it means to manage expenditure, reduce the State, priorities controlling their never ending give-a ways. Use money to keep us safe and secure not for funding pet projects and keeping other Countries flush with our money

  22. Bingle
    January 24, 2024

    I am confused, and not for the first time. How does borrowing less than forecast put money into the Chancellors pocket, especially as he still has to borrow billions? It does not do that for me!

    And all based on bad forecasting.

    1. Mickey Taking
      January 25, 2024

      Its tragic – borrowing less means you don’t have so much to give away!

  23. ChrisS
    January 24, 2024

    Last year I under-estimated my tax bill and had to pay £4,000 extra tax at the 40% rate because I took too much out of my SIPP last February. I am now in the middle of working out where I stand for this year, and don’t intend to make the same mistake again. If Hunt had increased the higher rate threshold, I would be taking more out of my Pension next month, so he is going to lose revenue from me as a result. I will spend some savings instead.

    It is also deterring me from selling one or two properties because of the capital gains tax liability that the Conservatives have increased so much over the last 14 years. Again, more revenue lost, plus some home improvements and a new ( IC-engined) car I won’t be buying.

    There must be many thousands of other people who have been making the same calculations since Christmas.

  24. Paula
    January 24, 2024

    Do you think that VAT piggy backing on inflation hasn’t been noticed ? Kerching-time for the Treasury.

    Those gold plated pensions are being eyed covetously by those who can barely reach the end of next week… let alone afford them for themselves.

    The Tories (and the country) are set to implode. There is nothing that can be done about it now. Tice is right not to do any deals.

  25. The PrangWizard
    January 24, 2024

    As for tax cuts I would again put forward the view that a starting point must be to increase personal tax allowance to £20,000pa. To some it may sound impossible and ridiculous, but it has been fixed at £12,750 I think for a year or two, wages have increased and it would be an advancement. A lot of the income gained would be spent, which can’t at present, giving many businesses a lift thus more VAT back to government anyway.

    1. a-tracy
      January 25, 2024

      In 2010 the Personal Income tax allowance was £6475. In 2015/16 it was £10,500.

      The personal income tax allowance was last increased to £12,570 in 2020. in 2019/20 it was £12,500, in 2018/19 it was £11,850The Personal Allowance goes down by £1 for every £2 of income above the £100,000 limit. It can go down to zero.

      The Personal National Insurance Allowance increased on 5/07/22 from £9880 to £12,570.
      The introduction of the Health & Social Care levy in April 2023 was cancelled 1.25%.

      1. Mickey Taking
        January 25, 2024

        I’m not sure I follow where you are taking us! The low incomes( under 20k?) need help. The slightly better to say 35k need some breathing space. Those above but under 100k don’t need as much in growth but maybe need motivation too !
        Above 100k I’d venture you live in a protected world – pull your fat waistband in and try other peoples shoes!

        1. A-tracy
          January 25, 2024

          I’m merely pointing out to PrangWizard that the income tax threshold was frozen from 2020 (four years this April) not just a year or two. But the NI threshold did increase for workers in 2022.

          MT, richer tax payers had the highest taxes imposed on them. An effective rate of 60% from £100k to £125k and more if a graduate with a student loan since 2010. If they had children they lost their child benefit from £50k from 2013.

          I don’t think Inheritance tax should be changed too much other than an inflationary increase in the thresholds that haven’t been changed 2009.

          Your wish for a big increase in taxes for the wealthy will be along soon enough MT.

  26. Old Albion
    January 24, 2024

    Ooh! look. Months from a General Election and the magic tax cuts tree appears.
    You can fool some of the people some of the time …………………………………..

  27. RDM
    January 24, 2024

    Careful targeting of Tax Cuts is whats needed!

    Would an increase in consumption feed straight into inflation? Currently, Yes!

    So, Business activity rate increasing Tax Cuts, would be good!
    Corp (12.5%), VAT/VAT Thresholds, Fuel duty, business rates,…

    In the longer term, target supply, home grown production (areas where prices are being forced up)?
    Farming needs to increase food production, attract more farm labour, and greater profitability!
    Fishing needs to increase production, and profitability!

    Supply side Reforms;
    IR35, and support for the self employed, Contractors, Owner Drivers, and family SME’s.
    HGV regulation need to support entry for a single truck owner driver!
    Strong competitions regulator!

    Long term strategy; Energy Intensive industry’s needs cheap energy!

    House/social building, lower migration, life long learning (skills & training),…

    Lots for a real conservative to do, with focus on the Brexit benefits, by moving to a Free Market (we are still aligned), and introducing a working Price Mechanism, and restructuring UC/NLW to remove state dependency and a drive to lower wages, subsiding cheap labour for big company’s!

    1. a-tracy
      January 25, 2024

      Which big companies are getting subsidised cheap labour? What are their current job vacancies advertising pay rates are?

  28. Original Richard
    January 24, 2024

    “Plenty of headroom for tax cuts”

    Cutting taxes is the financial equivalence to are-arranging the deck chairs on the Titanic. We need far more importantly first to reverse the economy destroying Net Zero Strategy and the economic and social destruction of mass immigration.

    It was the Canadian multimillionaire, Maurice Strong, described by the UN as a “visionary and pioneer of global sustainable development” who wrote :

    “If we don’t change, our species will not survive… Frankly, we may get to the point where the only way of saving the world will be for industrial civilization to collapse.”

    With the Treasury advocating increased immigration and the CCC/DESNZ/DBT pushing Net Zero ahead with the closure of our only steel making plant, and expensive, chaotically intermittent renewable “energy” we are seeing the disastrous effects of the fifth column Marxists and feudal WEF/Maurice Strong environmentalists at work.

    The senior bosses at the Civil Service have said they want a change of government but those voters who do not support the destructive mass immigration and Net Zero policies should realise that any change of government which includes any members of the existing uni-Party will not halt these policies and in fact a change to Labour/Lib Dem/Green will probably be even worse. These voters should aim for the obliteration of all existing Parliamentary parties when they next go to the polls.

  29. agricola
    January 24, 2024

    Whatever short term is done with taxation, we need to rethink our strategic position. The U Boat challenged us in both WW1 and WW2, because even then with an acceptable population in the 40 millions, we imported far too much. Everyone must know that with fhe last vestiges of heavy industry under sentence, insane denial of our own fuel resources, lethargic investment in atomic energy, an unbelievable financial push on farmers to rewild rather than produce food, and a basic lack of raw materials, we are even more vulnerable to political and military threat.

    Without telling them, lest we cause offence, we should consider every other country in the World our competitor on the simple premis that when push comes to shove they will put their own interests first. Who can blame them.

    On this basis we should work flat out to make ourselves either fully independent or as independent as possible in terms of energy, manufacture of raw materials, manufacture of consumer goods, and most critically food. We also need to ensure that there is enough incentive to retain and exploit our native wit, as one of our greatest assets is our creativity. We could learn much from Israel and Japan.

    I realise that even if our economy were maximised in the way I suggest we would still have much that needed to be imported, however we would be much less vulnerable than we are now. Nor do I advocate we stop importing, just confine it to figurative mangoes which we cannot produce. Maximising our productive talents would gjve us much we could export.

    I think government would be much more useful concentrating on the above fundamental issues than trying to fine tune our daily lives as they do unsuccessfully at present.

    1. Donna
      January 25, 2024

      “On this basis we should work flat out to make ourselves either fully independent or as independent as possible in terms of energy, manufacture of raw materials, manufacture of consumer goods, and most critically food.”

      The Globalists’ policy has been to make every country inter-dependent, so that they couldn’t go to war because they didn’t have the independent resources to do it. Hence the originator of the EEC was the Coal and Steel Community; then it became the EEC and they incorporated food with the Common Agricultural Policy.

      Now the EU has an inter-dependent Energy Policy (along with Net Zero) …. which is why the Government is relying on interconnectors with the EU to provide mega-expensive electricity when our heavily subsidised windmills aren’t working.

      Under the Brino+ the Not-a-Conservative-Government has saddled us with, we’re not ALLOWED to become energy independent; or ditch the Net Zero lunacy.

  30. Ian B
    January 24, 2024

    “Treasury officials advised Rishi Sunak that cutting taxes would have little impact on growing the economy and he should instead focus on boosting immigration.” We would never have guessed that!
    As Sir John’s link to indicated – Sadiq Khan’s London – is now 41% foriegn-born
    A PM, a Conservative Government for which Country?

  31. Keith from Leeds
    January 24, 2024

    20 years of overspending by Governments of Labour, Coalition and Conservatives has got us into this mess.
    A proper Chancellor would have cut spending to make room for proper tax cuts over the last 12 months, kept his mouth shut and then stunned the entire UK at the budget. For 12 months, we have had Mr Negative Hunt saying there is no room for tax cuts. Now, he can’t stop saying there will be tax cuts in the budget!
    But I suspect they will not be exciting or drastic enough to really fire up the UK economy.
    BTW has the idiot who arranged inflation-linked bonds been fired?

  32. glen cullen
    January 24, 2024

    I don’t want a tax cut because Hunt things we’ve been good little boys, or because the OBR or the WEF says its okay …..I want a tax cut because its conservative policy and mandated in the manifesto
    Forget net-zero, wokeness and pleasing the EU, just concentrate on the economy and helping business

  33. Bingle
    January 24, 2024

    In a reply to myself, it seems it is because of the fiscal rules. These allow him to borrow £Xbn but he has only borrowed £X-30bn. So he can ‘spend’ this £30bn and keep within them and the market is happy.

    Still seems a bit of a weird way to run an Economy.

  34. mancunius
    January 24, 2024

    Sir John, the Treasury, like the rest of the civil service, is beset by groupthink: civil servants are convinced that taxes must be high in order that civil servants may be adequately remunerated and pensioned.
    Their groupthink leftwing university indoctrination, self-conceit and virtual unsackability all reinforce this complacent belief.

  35. Ian B
    January 24, 2024

    From Guido – as if we didn’t already know

    ‘(Office for Budget Responsibility’s chairman Richard Hughes said the OBR’s forecasts are flawed because they are based on “questionable assumptions” and a lack of information from the government:

    “Some people call [the forecasts] a work of fiction, but that is probably being generous when someone has bothered to write a work of fiction and the government hasn’t even bothered to write down what its departmental spending plans are underpinning the plans for public services“.

    It’s probably not a good idea to tie your budgets to a forecaster that has misjudged UK public sector net borrowing by £53 billion every year since its formation…)’

    So why it still there, its a Conservative Government invention?

    It would appear George Osborne, a bit bored one day just thought it up as the UK had nothing better to spend taxpayer money on… the Conservative Government continues this charade

    Even more amusing –

    Then along comes Jeremy Hunt, he creates an advisory group to help him understand what the OBR means(sarc)

    Then today in the Media some Tories are upset, when basically there all calls to clear out the dead wood and bring in a Conservative – it is a question doe that happen now or later. Later as we know will damage the Country further, but it just has to be done.

  36. Original Richard
    January 24, 2024

    Make no mistake, high profligate spending, high taxes, high immigration, high energy prices, high inflation together with an unelected and ever increasing and powerful HoL, civil service, quangos, ‘Offs’ and other authorities instituting increasing rules, regulations and restrictions is designed to impoverish the country. There is simply no other explanation.

    Offering tax cuts is the modern equivalent of bread and circuses when the country is falling apart from a Marxist and feudal WEF fifth column onslaught which has weaponised environmentalism and immigration gainst us.

    1. Ian B
      January 25, 2024

      @Original Richard – Yup, bribing us with our own money to mask the never ending lists of failures no longer cuts it in the real world

  37. Derek
    January 24, 2024

    Regarding the action of this supposedly conservative Government, I am reminded of the Labour Part Conference speech in Blackpool 1976 by their leader, PM James Callahan who as a socialist told us –
    “We used to think that you could spend your way out of a recession, and increase employ­ment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of infla­tion into the economy, followed by a higher level of unemployment as the next step”.
    It appears the current conservative government still believes in this spending practice but accepts that cutting taxes does not increase employment.
    I suggest it depends on what taxes are cut. Cut the taxes (and rules) that prevent a company from hiring (and firing) staff, cut their overheads like CGT and give them the incentive to expand and take on more employees. And why should people work harder when they have to give more to the Government to likely waste it on vanity pipe dreams. Don’t cut income tax (yet) but raise the threshold level when tax is paid so that the ordinary worker can see immediate benefit and buy more. Much has changed since 1976, especially the weather, but as for taxation, we’re worse off now. Why? The current Government wasted £ Billions on lockdown payments and now expect us to pick their tab. A pity they cannot be held to account for it, but they can at least make it easier for us. But do not want to do so. Losers.

  38. formula57
    January 24, 2024

    So had Mr. Hunt, his Treasury operatives and the OBR listened to your advice of some time ago, we all could have been benefitting from growth-stimulating, inflation-reducing tax cuts well-before now!

    Time to “rejuvenate” the Treasury as well as the BEIS.

    1. Derek
      January 26, 2024

      Sadly, the story for every Government over the past three decades. They seemingly never listen to their own elected party members who have the knowledge and experience on the subject matter. They are always dominated by the opinions of those unelected, faceless persons who have never experienced anything outside of their politics and Whitehall itself. Their own centre of the universe.
      How could any career civil servant know how to properly run a business? Read all about it? In business, theories and dubious computer models are not nearly enough to get by.

  39. Ed M
    January 25, 2024

    Helping to boost the UK’s High Tech industry MUST be central to the Tory’s policy to building up our economy.

    But it isn’t.

    99% of high tech entrepreneurs and big high-tech companies would strongly agree with me.

    An industry that is worth billions and billions to our economy. With high quality jobs overall / high productive jobs / high salaries / high skills / varied skills / creating strong brands / exporting strong brands abroad.

  40. a-tracy
    January 25, 2024

    Doesn’t anyone else feel that we are being played? Walked through a change of government, so that changes can be made next year that a Conservative government just wouldn’t get through. A lot of the Conservative MPs already lined themselves up with other jobs.

    The OBR says the Treasury is responsible for their out-of-whack forecasts, so just what is the point of them, just give them notice and keep it in-house if they’re just regurgitating Treasury information, yet another Osborne con trick..

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