Jeremy Hunt has announced that a spring budget expected to feature a host of tax cuts will be held on 6 March, fuelling speculation over an early general election.
While government sources insisted nothing should be read into the date, it is the earliest the set-piece fiscal event has been held in 13 years of Conservative government – apart from 2021 when the Treasury was trying to kickstart the economy after Covid.
Budgets must take place before the end of March, but are more commonly scheduled for the second or third week of the month. The decision to hold it at the beginning of the month has prompted speculation that Sunak has not ruled out an early vote, despite currently abject poll ratings.
The announcement was made in a Treasury tweet saying Jeremy Hunt, the chancellor, had commissioned the Office for Budget Responsibility to prepare forecasts for the economy and public finances and will reaffirm Labour’s decision to prepare for a possible spring election.
Keir Starmer has already ordered his shadow ministers to finalise their manifesto policies by mid-January, in time for the manifesto to be completed by 8 February, the Guardian revealed.
A Labour source said: “Whatever they tell people, every decision the Tories have made has been geared to calling an election in May, if they believe that is to their advantage.
“Labour will be ready whenever they call it but for the country’s sake, the sooner people are given a chance to turn the page on the Tory years and make a new start, the better.”
Sarah Olney, the Liberal Democrat Treasury spokesperson, said the early March budget was “a last throw of the dice by a flailing Conservative government”.
Whatever election date is chosen, the budget will almost certainly be Hunt’s last major set piece fiscal event before it takes place, and he is under increasing pressure from Tory backbenchers to slash taxes.
There is particular focus on inheritance tax, the abolition of which is the subject of a vehement joint campaign by backbenchers and some newspapers, despite the fact it currently affects the estates of fewer than 4% of Britons.
Downing Street is actively thinking about whether to entirely scrap inheritance tax, the Telegraph reported, as part of a wider “gear change” on tax in the budget.
However, a No 10 source said it was speculation, and not an idea being pushed by Downing Street.
Asked about scrapping inheritance tax, Sunak’s deputy spokesperson declined to comment directly, but stressed both the limited scope of the tax – fewer than 4% of estates currently pay it – and the amount of money it raises.
“On inheritance tax more broadly, the vast majority of estates do not pay inheritance tax, and the tax is forecast to contribute almost £10bn a year by 2028-29 to help fund public services that millions of us rely on,” she said.
There is also some division among Tory MPs about the idea. Jonathan Gullis, a former minister on the right of the party, tweeted that while he wanted inheritance tax to be scrapped, a priority should be cuts to income tax.
Neil O’Brien, another former minister, pointed to polling suggesting that most people would prefer tax cuts that help lower and middle earners.
Under the current rules an election takes place 25 working days after parliament is dissolved. A 2 May vote, a date that would coincide with local elections in England and Wales, would thus require dissolution by 28 March.
Such an early budget could even allow Sunak’s government to try to rush a slimmed-down finance bill through parliament, putting any tax cuts into law. This would force Labour to say whether or not they would repeal the tax cuts.
This was done in 1992 when John Major’s Conservative government passed a tax-cutting finance bill within days of the budget, and went on to unexpected victory in a spring election.
While this precedent might seem alluring, Tory ministers and strategists will note that before 1992 Labour had a poll lead of at best a few percentage points, not the near-20 point margin enjoyed by Keir Starmer. Many Conservative ministers still believe an election later in 2024 – by law it must happen before 28 January 2025 – is still more likely.
The 6 March date also gives Hunt time to make changes to fuel duty before the expiry of a temporary 5p cut in the tax on petrol, diesel and other fuels, which would come alongside a planned inflation-matching rise pencilled in for the end of the month.
