Quick economic recovery could see Treasury delay tax rises plan

Treasury ministers are hoping that a quick economic recovery in the middle of next year will mean that any consideration of significant tax rises can be delayed until 2022.

There has been speculation for months that personal taxes will start to increase in this spring's Budget to start bringing down the deficit, which has surged during the pandemic.

However The Telegraph understands that senior Treasury ministers are keen to ensure the UK has gone past the worst of the pandemic before even considering tax rises.

This realistically pushes any large-scale increases in taxes to March 2022 at the earliest.

Last night a senior Treasury source told The Telegraph that people would have to wait "a bit longer" than the Budget to see whether tax increases were necessary.

The source also pointed to comments by Rupert Harrison, George Osborne's former adviser, who said it could taken at least another year to ascertain the scale of the economic damage.

Mr Harrison, now an executive at US fund manager BlackRock, said: "Serious measures which probably will come at some point around taxation and on spending restraint are going to be in a year's time at the earliest."

The Treasury source described his analysis as "interesting".

The news came as a survey for The Telegraph found that fewer than four in 10 of Britons said taxes should increase to help cover the black hole left by the coronavirus pandemic.

The poll by ORB International found that 38 per cent of people agreed that tax increases should be used to pay for the pandemic, while 31 per cent disagreed and 32 per cent were unsure.

Any delay to tax increases will be welcomed by Tory tax hawks. Liam Fox, the former Cabinet minister, said the Chancellor had to wait to see what his options are as the pandemic subsides.

He told Chopper's Politics podcast: "We have to be patient. All the calls for 'we must balance the books quickly, we must see tax rises and spending cuts' are utterly premature.

"This is a time for a genuinely small 'c' Conservative chancellor to make sensible and rational choices which I think he has done."

Mr Fox said that tax rises had to wait until after March when it will be clear what the "return to normal" looks like.

He added: "We could see if the vaccine scheme is successful and rolled out quickly, relatively quick return to normal."