Liz Truss has been warned that she could lose support from “red wall” voters in the north after huge tax cuts were announced during the week, by a Tory MP.
Chancellor Kwasi Kwarteng’s so-called “mini-Budget” introduced the biggest package of tax cuts in decades which included the abolition of the top rate of income tax, a cut in the basic rate, a reduction in stamp duty, the cancellation of the National Insurance increase and the scrapping of the rise in corporation tax from 19pc to 25pc.
Northern Tory MPs are said to be concerned that they could lose support from constituents following the controversial £45bn tax-cutting package.
“Abandoning a voter coalition that won us a majority of 80 in pursuit of trying to win all seven libertarian voters in the country is certainly a bold move,” one Conservative MP told the Observer.
Another senior Tory said: “I told Liz before that in areas like this it would be difficult to sell a free market, free enterprise approach when they have had a protective blanket thrown round them during the pandemic and since, with energy bills.”
Lord O’Neill, a former Tory Treasury minister who advocated investment in the north under David Cameron said the new plans were completely Blue Wall focused.
He said: “It is completely blue wall focused. Have they just decided they’re going to abandon the red wall? I’m sensitive to this because of my background, but many people I know on a personal basis are talking about bankers’ bonuses.
“It’s almost like they deliberately made a song and dance out of trying to do more for higher earners. It’s very surprising.”
The Resolution Foundation revealed that the Chancellor’s huge tax cuts will provide a £1,600 increase to household incomes in London and the South East, compared to £500 in the North East, Wales and Yorkshire.
The think tank said the measures suggest the new Government has given up on courting Red Wall voters in the north, with the bulk of the stamp duty savings likely to accrue to southerners.
Torsten Bell, chief executive of the Resolution Foundation, said: “Today’s Conservative Party is no longer fiscally conservative or courting the Red Wall, with debt on course to rise in each and every year, and its focus shifting south where the main beneficiaries of these tax cuts live.”
He said the package would boost growth in the short term but warned the Chancellor needs good fortune to make his “growth gamble fully pay off”.
Despite criticism, both Ms Truss and the Chancellor claimed the tax cuts will help stimulate growth in the UK.
Mr Kwarteng said: “We cannot have a tax system where you are getting a 70-year high, so the last time we had tax rates at this level before my tax cuts was actually before Her late Majesty had acceded to the throne.
“That was completely unsustainable and that’s why I’m delighted to have been able to reduce taxes across the piece.”
Treasury minister, Chris Philp, backed the Chancellor saying the tax cuts were a “necessity”.