Chancellor hints at move away from austerity

Philip Hammond says he understands people are 'weary of the long slog' - but does not rule out tax rises

Chancellor Philip Hammond at Downing Street 
(Image credit: Jack Taylor/Getty Images)

A reinvigorated Philip Hammond used an appearance on the BBC's Andrew Marr Show yesterday to hint the government could "ease up on its austerity programme", says The Guardian.

The Chancellor said the Tories were "not deaf" to the message delivered by voters in the snap election this month and that he accepted "people are weary of the long slog".

However, by sticking to the government's plan to eliminate the deficit by the middle of the next decade, Hammond's comments could signal tax rises will be necessary to fill the gap on spending.

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He said: "We have never said we won't raise some taxes. Overall, we are a government that believes in low taxes and we want to reduce the burden of taxes overall for working families."

Asked whether he would go ahead with £3bn of cuts to local government funding, he replied: "We’ve set out a series of measures that are already legislated for.

"We have other proposals that we will now have to look at again in the light of the general election result and in the new parliament."

According to calculations by Resolution Foundation think-tank, a further £9bn of savings from the welfare budget is included in those proposals, says the Financial Times.

"These include freezing all working-age benefits in cash terms for four years, starting in April 2016."

The Conservatives' election manifesto included a promise of more spending restraint, including plans to scrap the so-called pensions "triple-lock" after 2020 and severely restrict the winter fuel payment to pensioners.

These measures are unlikely to survive a deal with the Democratic Unionist Party, on whose ten MPs Theresa May is depending to pass a Queen's Speech. The Northern Irish party has pledged to support both the triple-lock and universal winter fuel payments.

One option that could be resurrected is the abortive plan from the last Budget to raise national insurance on the self-employed from nine per cent to 12 per cent.

As this would bring the levy into line with that imposed on those who work for an employer, the plan had the support of a number of experts. However, it was scrapped because it fell foul of a 2015 Tory manifesto pledge.

In its campaigning this time, the Tories only pledged to support the principle of lower taxes and not to raise VAT.

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