Downing Street has warned Conservative MPs they could lose the party whip if they vote against next week’s Budget, amid suggestions there could be a rebellion over a possible increase to corporation tax.
The warning came on Thursday as Tory former chancellor Lord (Philip) Hammond urged Boris Johnson to risk unpopularity by telling the public “some difficult home truths” about the damage the coronavirus pandemic has caused to the economy.
Former prime minister David Cameron warned Chancellor Rishi Sunak that tax rises “wouldn’t make any sense at all” as the nation opens back up from lockdown.
No spending or taxation plans have been confirmed ahead of Wednesday’s Budget, but there are suggestions Conservative MPs could rebel if it contains sizeable tax hikes.
The Times reported that officials are considering plans to increase corporation tax from 19% to 25%.
The Prime Minister’s press secretary, Allegra Stratton, told reporters on Thursday that No 10 would consider votes against the Government’s Budget by Tory MPs as a confidence issue, meaning they could be stripped of the whip.
Mr Cameron, who is no longer a Conservative MP, warned against tax rises as he defended his own austerity policies, telling US broadcaster CNN: “Today we do face very different circumstances.
“So piling, say, tax increases on top of that before you’ve even opened up the economy wouldn’t make any sense at all.
“I think it’s been right for the Government here in the UK and governments around the world to recognise this is more like a sort of wartime situation.”
Labour leader Sir Keir Starmer has also said “now is not the time” for tax increases.
Lord Hammond urged the Prime Minister to level with the public amid rising unemployment and the economy being hit by the biggest annual decline on record.
He told the BBC: “My fear is that, as a populist government, giving money away is always easier than collecting it in.”
The Conservative life peer, who resigned as chancellor when Mr Johnson became Prime Minister, urged ministers to focus on growth and to ditch “very extravagant” promises from the manifesto.
“Not all of those commitments can now sensibly be delivered on and that’s going to be a big challenge for a Government that regards its short-term popularity as very, very important,” he said.
But Lord Hammond added he was “not sure” the “top leadership” has the “appetite for being unpopular, in order to do the right thing”.
Ms Stratton responded: “I don’t recognise the picture the former chancellor makes.”
She cited “difficult” policy decisions made by Mr Johnson, including to cut foreign aid, and to order people to stay home during the coronavirus pandemic.
“This is a Prime Minister who is prepared to take difficult decisions and is weighing up very hard choices at the moment,” Ms Stratton added.
She insisted “we are committed to the manifesto” but declined to comment on specifics until the Budget.
There has already been significant speculation about what Mr Sunak will announce, including reports that he could relaunch the Eat Out to Help Out scheme.
Vouchers for high street shoppers have also been suggested, as has bringing in lower alcohol duty for restaurants and pubs in recognition that the sector will continue to be impacted by restrictions until early summer.
It has also been reported that Mr Sunak may extend the stamp duty tax holiday by three months to stimulate the property market, as well as the business rates holiday.
He is also under pressure to extend the furlough scheme to protect jobs – due to end on April 30 – as well as a £20-a-week rise in Universal Credit.