Tory backbenchers anxious about plans to lift the freeze on fuel duty have been told by Treasury ministers that they must accept taxpayers will have to contribute “a little bit more” to help fund a £20bn cash boost for the NHS.
Mel Stride, the financial secretary, suggested that the public could expect taxes to go up “in their different ways” so that the prime minister’s spending pledge could be met while continuing to reduce the deficit.
The government faces a furious backlash from some Tory MPs over the proposal, revealed by the Guardian, to scrap the eight-year long freeze which could raise £800m extra for the Treasury next year – and billions more over subsequent years.
Former minister Robert Halfon, a longstanding critic of lifting the freeze, claimed it would be “absolute madness” to restart inflation-linked increases. He predicted that MPs would launch a vociferous campaign from the backbenches against any move.
“There will be huge amounts of opposition from colleagues in marginal seats to this, to asking the public who are already struggling, to pay more taxes. I think there will be a big backlash against the government,” he said.
However, Stride told MPs: “We will of course be looking at taxation and everybody in their different ways paying a little bit more to make sure that we fund the significant amount we have now committed to our NHS.”
Ministers have been grappling with how to fund the prime minister’s health service promise without ripping up the Tory manifesto pledge to eliminate the deficit by the mid-2020s, set against the backdrop of the so-called Brexit dividend.
Philip Hammond, the chancellor, told MPs that any net benefit from the return of money paid to Brussels would “depend intrinsically” on the final deal Britain managed to strike. He said hoped the sum would make up the “largest possible” proportion of NHS funding.
Senior government sources told the Guardian that the plan to scrap the freeze, first enacted by George Osborne but continued by Hammond, was “under serious consideration” as it would ease pressure on public finances, with a number of ministers lobbying for funding for their own departments.
Ministers are also understood to be considering lifting the freeze on alcohol duty announced in last year’s budget, which costs the Treasury more than £200m a year.
The prospect of lifting the fuel duty freeze, which has saved individual motorists hundreds of pounds over the last eight years but cost the Treasury in the region of £46bn since 2011-12, prompted a furious response from Tory backbenchers.
Halfon said: “It would be a disastrous thing to do. We’re supposed to be a party of workers and instead we think about slapping a hefty tax on them. I don’t think that putting a tax on working people should be the way we pay for the NHS. In particular a tax that has such implications for the whole economy.”
Another backbencher, Kirstene Hair, who sits on the all-party group on fair fuel, said: “I cannot underestimate the impact a fuel duty rise will have on families, small businesses and haulage firms.
“The cost for individuals getting to work every day and the costs for small businesses and for logistics firms will all rise. All this means is that people’s disposable income will be squeezed further as prices increase.”
However, many Tories believe that the public mood has shifted in favour of investing in the NHS and other public services, and see the proposal as the best way of fulfilling the party’s pledge to eliminate the deficit.
The prime minister’s official spokesman said he would not comment on tax plans before the budget. He added: “But we have frozen fuel duty for eight successive years, at a cost of £46bn, and we have a continuing commitment to help families keep more of what they earn.”
Howard Cox, of group lobbying Fair Fuel UK, warned that the proposal would be politically disastrous. “The UK’s 37 million drivers are still the highest taxed in the world despite eight years’ freeze. Any emotive hike to fund the NHS will be suicidal for the government,” he said.
“The deliberate leak of a potential fuel duty hike to a pathologically environmentally focused newspaper that hates four wheels, is evidence that the government is testing public opinion.”
