Osborne's tax cut dilemma

Cutting taxes could cause at least as many problems as it solves for the Chancellor.

Ever eager to distinguish himself from the coalition, Boris Johnson has called for a programme of tax cuts to "stimulate growth". The National Insurance rise, he says, should be reversed and the 50p rate should be scrapped to demonstrate that London is "open for business". George Osborne, who has long hinted that he will abolish the top rate by 2013, must be tempted to take up Johnson's call for a supply-side revolution. Even today's Sun attacks him for refusing to accept that a "dash for growth is not incompatible with reducing the deficit." (Although in a post-hacking age that may no longer be a surprise.)

But it's worth noting that cutting taxes could cause at least as many problems as it solves for the Chancellor. The Lib Dems are willing to support the abolition of the 50p rate but only if it is replaced by a range of new property-based taxes - exactly the sort of measures likely to enrage the right-wing press. Worse, the spectacle of a Conservative Chancellor cutting taxes for the richest one per cent while VAT remains at 20 per cent would be political gold for Labour. It would destroy Osborne's already dubious claim that "we're all in this together." Polls have consistently shown that the 50p rate is popular with voters. A recent Sunday Times/YouGov survey, for instance, found that 33 per cent think the top rate should be scrapped, compared to 49 per cent who think it should be made permanent. Significantly, 51 per cent would like to see the starting threshold brought down from £150,000 to £100,000, with 29 per cent opposed.

In addition, unless Osborne can demonstrate that his tax cuts would be self-financing he would either have to slow the pace of deficit reduction (something he has repeatedly ruled out) or make even larger spending cuts. The five-year departmental budgets, we have been repeatedly told, are set in stone (the average cut is 11 per cent; 19 per cent if we exclude the NHS and international development - the ring-fenced departments.), which leaves Osborne with the option of making further cuts to welfare spending, something hardly likely to appeal to the Lib Dems. The Chancellor's room for manoeuvre, it is becoming increasingly clear, is shrinking by the day.

George Eaton is political editor of the New Statesman.

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Police shoot man in parliament

A man carrying what appeared to be a knife was shot by armed police after entering the parliamentary estate. 

From the window of the parliamentary Press Gallery, I have just seen police shoot a man who charged at officers while carrying what appeared to be a knife. A large crowd was seen fleeing from the man before he entered the parliamentary estate.

After several officers evaded him he was swiftly shot by armed police.

Ministers have been evacuated and journalists ordered to remain at their desks. 

More follows. Read Julia Rampen's news story here.

Armed police at the cordon outside Parliament on Wednesday afternoon. Photo: Getty

George Eaton is political editor of the New Statesman.