Expert who influenced Thatcher and Truss insists Jeremy Hunt must cut taxes - after IMF says no room for any breaks

31 January 2024, 12:15

Prof Minford had the ear of Margaret Thatcher
Prof Minford had the ear of Margaret Thatcher. Picture: Alamy
Henry Riley

By Henry Riley

A professor who had the ear of Margaret Thatcher has warned Jeremy Hunt he must cut taxes - after the the chancellor was told he did not have space to slash bills.

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Pro-Brexit professor Patrick Minford, who is also said to have influenced Liz Truss, told LBC that Mr Hunt must put more money into Brits' pockets to grow the economy.

His intervention comes after the IMF said spending on the NHS, schools and social care would restrict his room to manoeuvre but has also forecast sluggish growth.

Prof Minford said: "This whole business that we can't afford tax cuts is completely misleading, we cannot afford not to have tax cuts... because of the needs of growth."

Read more: Jeremy Hunt warned off further tax cuts as IMF insists more money needed for NHS, schools and social care

The warning comes as the Treasury and No10 contemplate what measures to include within the raft of announcements expected in March.

Asked what cuts Jeremy Hunt should implement, Professor Minford said the government should focus on Corporation Tax and the "top rate of tax".

Prof Minford demanded Jeremy Hunt cut taxes
Prof Minford demanded Jeremy Hunt cut taxes. Picture: Alamy

"I think the key tax is corporation tax because that's what affects the incentives of business to innovate and of entrepreneurs.

"The second key tax is the top rates of income tax... entrepreneurs who make the productivity growth decisions that underpin our growth are the ones who are liable for those top marginal rates of tax."

Minford added "those are the two tax rates that impinge directly on entrepreneurial incentives to grow - Corporation Tax and top marginal rates of tax are the things that really need to go."

Read more: Lower borrowing than expected 'could pave the way for tax cuts' in Jeremy Hunt's Spring Budget

The economist also called for Inheritance Tax to be drastically cut, saying it "is not a very costly thing to reduce quite substantially".

Quizzed about whether working people should also have their taxes cut he said: "Any tax cuts we can make are beneficial to people generally."

"This is really something that needs to be attended to as a general booster of confidence and could be easily afforded."

Patrick Minford also conceded that there was little difference between the current incarnation of the Conservative Party and a future Labour government saying that there was "hostility" to the idea of dramatic tax cuts.

One former Conservative Minister, though, hit back at the suggestions from Patrick Minford, saying: "If we learned anything from the past 14 years, it is that the economic proposals from Liz Truss are not what we should be shouting about… completely disproven, unworkable and akin to electoral suicide."