Jeremy Hunt is facing pressure to go further on tax cuts, while dozens of Conservative MPs have vowed to block any future tax rises by their government.
After the chancellor announced a surprise 2p cut to national insurance in the autumn statement on Wednesday, he faced immediate calls from the right wing of the party to cut income tax or inheritance tax in the spring budget.
Ranil Jayawardena, who runs the Conservative Growth Group, described the autumn statement as “a good start”, but called for action on the “unpopular” inheritance tax and on frozen income tax thresholds that have dragged millions of people into higher tax brackets.
“Next we need to turn our attention to the squeezed middle – the police sergeants, experienced schoolteachers and junior doctors – who shouldn’t be paying 40% tax, by lifting that threshold,” he said.
Liz Truss, the former prime minister, called for corporation tax to be cut from 25% back to the 19% rate it stood at in April, which she said would encourage growth.
Jake Berry, a former party chairman and influential “red wall” MP, said that a “tax pledge” signed by more than 40 MPs earlier this year – including Truss – would apply to every forthcoming fiscal event, meaning the group will oppose any future tax rise.
Berry published a letter from Hunt in which the chancellor emphasised that the autumn statement unveiled no new taxes and contained what he said were the biggest package of tax cuts implemented since the 1980s. He welcomed the letter and tweeted: “The signatories to the @TaxPledge will be seeking this confirmation at every single fiscal event.”
Many Conservative backbenchers welcomed the autumn statement. Centrists from the One Nation Caucus, which has 106 registered MPs, said it was “a fiscally responsible approach to spending”.
But Labour said Britain’s economic growth had “hit a dead end” as it focused on UK growth forecasts, which have been downgraded for the next two years.
Working people would be “worse off” despite the government’s promises, said the shadow chancellor, Rachel Reeves, as she and other opposition party figures stressed the continuing squeeze on household budgets from the cost of living crisis.
Reeves said voters were still paying the price for what she described as the Conservatives’ “economic recklessness” following last year’s mini-budget, which has left 1.6m families facing large hikes in payments when their mortgage deals end this year.
“Mortgages rising, taxing eating into wages. Inflation high, with prices still going up in the shops. Public services on their knees. And too many families struggling to make ends meet,” she told MPs.
She asked Hunt whether cutting inheritance tax was a “decision delayed or a decision abandoned” before telling MPs: “This autumn statement for growth is now the 11th Conservative economic growth plan from the fifth prime minister, the seventh chancellor and the ninth business secretary.
“And what do those numbers add up to? According to the most recent GDP data, a big fat zero. That’s zero growth in the most recent data in the third quarter of this year.”
The SNP’s economy spokesperson, Drew Hendry, said the autumn statement bolstered the case for Scottish independence and that the welfare changes unveiled by Hunt showed that the “nasty party is back in business”. “This government is on the record as working to the principle of ‘Let people die’,’” he added.
Hunt’s statement was described by the Liberal Democrats as a “deception” after years of what the party called “cruel tax hikes on hardworking families”. “Conservative chaos has sent mortgages and tax bills soaring. Today’s announcements won’t even touch the sides,” said the Lib Dem Treasury spokesperson, Sarah Olney.
