Around 60 Conservative MPs have pledged to vote down their party’s own budget if Britain left the EU – as Tory tumoil over Europe deepens.
George Osborne last night warned that after Brexit he would have to raise the basic income tax by 2 per cent, raise the higher rate by 3 per cent, and inheritance tax by 5 per cent.
He also pledged £2.5bn cuts to the NHS budget, defence spending reductions of £1.2bn, and education cuts of £1.15bn.
The Chancellor said the budget, based off calculations by the Institute for Fiscal Studies about the impact of Brexit, was necessary to plug a “black hole” in the public finances that would open up.
Sky News however reports that 57 Conservative MPs have however signed a letter point-blank refusing to back the cuts – raising the prospect of the Government collapsing.
Dr Liam Fox, a eurosceptic, said Mr Osborne was “putting his own position in jeopardy” with the planned budget, while Steve Baker said he was “shocked” at the plans, which he said broke Tory manifesto pledges.
The threat to kill the Conservative budget could lead to an early general election because budgets are treated as so-called “confidence votes” in the competence of the administration.
With a narrow majority of around a dozen MPs, the Chancellor would almost certainly be unable to pass a budget that was not backed by his significant cadre of eurosceptic MPs.
Mr Osborne however told BBC Radio 4’s Today programme this morning that the country simply would not be able to afford its current level of spending after Brexit.
“The point is the country does not have a plan if we quit the EU. We’d wake up in just over a week’s time with no economic plan for our country, with years of instability,” he told the programme.
“You’d have to cut your cloth accordingly: the country would not be able to afford to size of the public services we have at the moment and we would have to increase taxes.”
He pointed to the fact the plan was also backed by former Labour chancellor Alastair Darling. Labour’s current leadership has however refused to back the policy.
“I doubt since 1957 you’ve had a situation where a Conservative and Labour chancellor both agree,” the Chancellor said.
“I’m pointing out that the kind of measures we’d have to take are ones that any chancellor would have to take.
“Let’s be clear – no Conservative wants to raise taxes, least of all me. But equally Conservatives understand that you cannot have chaos in your public finances. You would have to deal with the hole that would emerge in your public finances if you quit the EU.”
The Tory row over post-Brexit cuts comes as Labour argues over whether there should be new restrictions on freedom of movement within the EU.
Deputy leader Tom Watson yesterday said he backed new controls of immigrants from Europe, but leader Jeremy Corbyn last night rejected them.
The European Union referendum will take place on 23 June, next week. The deadline to register to vote in the poll has now closed.
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