But now they say reduced inflation has made tax cuts affordable with price rises falling from their peak of 11pc in 2022 to 4pc in December.
Sir John Redwood, who served as the head of Margaret Thatcher’s Downing Street policy unit, said the documents showed that the Treasury was “very wrong”.
“Two really bad ideas have come out of the Treasury here,” he said. “More migration does not boost per capita incomes, it keeps wages down and puts a big increase on public expenditure to provide services and housing.
“Cutting taxes of the right kind will bring inflation down, promote growth and stimulate rising real incomes. The Treasury seems to work on a model that says higher taxes always raise more revenue, where they can actually bring down revenue by deterring investment, and underestimates the way in which cutting the right taxes can.
“They are very wrong on the economic impact of plenty of low-wage migration, which gets in the way of productivity, training and more investment.”
Sir Jacob Rees-Mogg, a former business secretary, added: “Immigration does not boost GDP per capita growth, which is what actually makes us better off, and the Treasury’s support for mass migration has actually made us individually less well off.
“In terms of tax cuts, if you look at the US economy after Trump’s budget and the UK economy after Lawson’s tax-cutting budget, both of them boom. Allowing individuals to keep and spend more of their own money is a good way to grow the economy – as individuals spend their own money better than governments do.”
The Office for Budget Responsibility (OBR) warned in November that while the economy was now larger than its pre-Covid size, this has been driven by a higher population amid a surge in net migration.
William Turner is a seasoned U.K. correspondent with a deep understanding of domestic affairs. With a passion for British politics and culture, he provides insightful analysis and comprehensive coverage of events within the United Kingdom.
