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Thursday 25 October 2018 8:11 pm  |  Updated:  Tuesday 21 May 2019 4:21 pm

Philip Hammond should be unashamed to show he is a true blue in the Budget

By: Julian Harris

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With extra funding for the NHS and an end to austerity already announced, Philip Hammond must be wondering if it is him or John McDonnell delivering next week's Budget.

While the cash boost for the health service is welcome, and the narrative of ending austerity popular with certain commentators, Hammond must use the Budget to remind voters he is a Conservative chancellor in a Conservative government.

That means pushing on with the policies that dragged the economy back from the brink, not shying away from measures that helped deliver record tax receipts last year.

The shadow chancellor is quite clear what he would do if he ever found himself in 11 Downing Street. Income tax on top earners would be raised, the corporation tax rate would increase and borrowing would shoot up.

Like an alcoholic having a relapse, the economy would be back on the drink, kidding itself that this time there would be no hangover.

Never mind that reducing corporation tax from 28 per cent to 19 per cent helped bring in more money to the Treasury coffers than ever before – £56.2bn in 2017/18.

Never mind that slashing the top rate of tax – as politically unpopular as that may have been – saw income tax receipts increase by £27bn in eight years.

Never mind that the deficit is now a third of what it was in 2010, when it stood at a staggering 10 per cent of GDP.

Hammond must brandish these facts like a shield while those around him are succumbing to the far left world view that if you keep squeezing the economic fruits, juice will flow forever.

How can he do that? By pushing on with plans to raise the 40p tax threshold to £50,000, by cutting corporation tax to 17 per cent and by returning the public finances to balance as soon as possible.

Hammond should look to go further as well. The suggestion from business groups to extend tax relief on investment spending is eminently sensible at a time when productivity needs to improve.

Theresa May may have already tied at least one of Hammond's hands behind his back with the £20bn NHS spending commitment and the pledge to end austerity, but he must use the other hand to write a true blue budget.

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