Mr Sunak is under massive pressure from all wings of his party to reduce the record high burden on working families amid woeful poll ratings which show that the Tories could be reduced to a rump of just a few dozen MPs at the next election.
The Prime Minister is said to have initially favoured a more impactful 2p cut to income tax, which he felt voters were more likely to notice in their pockets, but the move was ruled out on the grounds of both expense and the risk it would be inflationary.
Instead, the Chancellor pushed heavily for another 2p reduction in National Insurance, arguing that it was better targeted at those who are working and would help boost growth and job creation by slashing the cost of hiring new staff for businesses.
Mr Hunt had by this point already taken the separate decision to freeze fuel duty for another year, an all but inevitable choice given the cost of living crisis facing families.
But faced with those grim OBR reports, Mr Hunt realised he was going to have to raise cash to pay for those measures. Officials were put to task brainstorming a series of revenue-raising ideas, including the windfall tax extension which so angered Mr Ross.
Other proposals included abolishing the non-dom status – pinching a key Labour policy in the process – bringing forward a new vaping levy, hiking air passenger duty for travellers in business class and scrapping tax breaks for owners of holiday lets.
As was inevitable, the Chancellor also faced a slew of demands from different groups of MPs with competing priorities. At a meeting last Monday the 100-strong One Nation Caucus of moderate backbenchers grilled him on stealth taxes and housing.
Meanwhile, the Right-wing Growth Group urged him during its own face-to-face talks to prioritise reforms to inheritance tax, stamp duty and taxes on the self-employed.
George Freeman, a former science minister, set up a new 50-strong Tory group on the eve of the Budget to push Mr Hunt to do more for rural voters facing sky-high energy bills.
It will undoubtedly be a relief for the Chancellor when he finally steps up to the Despatch Box on Wednesday afternoon to deliver a Budget on which, senior Tory MPs have warned him, the party’s future electoral prospects could well rest.
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.
