Rishi Sunak could use Budget to call snap May UK election, warns Labour

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Britain’s Labour party is on alert for Rishi Sunak to use next week’s Budget as a springboard for a surprise May general election, including using the fiscal event to steal some of the opposition’s key policies.

Sunak and Jeremy Hunt, the chancellor, on Friday put the finishing touches to the March 6 Budget, which is expected to feature eye-catching tax cuts and a promise that the economy has turned a corner.

Hunt’s allies have confirmed that the chancellor is considering stealing two of Labour’s key revenue-raising policies should he need to raise more money to fund pre-election cuts to national insurance or income tax.

Sunak and Hunt are looking at axing or scaling back “non dom” tax breaks — a key Labour policy — as well as extending a windfall tax on oil and gas companies, another of Sir Keir Starmer’s flagship ideas.

“They are definitely preparing for May,” said a senior Labour election strategist. “Whether Sunak ends up doing it remains to be seen. But we are ready whenever it happens.”

The prevailing view at Westminster remains that Sunak will go to the country in the autumn; the prime minister said in January that his “working assumption” was that the poll would take place in the second half of 2024.

A well-placed Tory insider said: “I would have said it was 10 per cent for a May election, but now I’d say it’s up to 30 per cent.”

A new YouGov poll on Friday gave Starmer’s party a huge 26-point lead, with Labour on 46 per cent and the Tories on 20 per cent. Many Tory MPs believe Sunak would be crazy to call an election in such a weak position.

David Gauke, a former Tory cabinet minister, is highly sceptical about an early election: “The Labour poll lead is enormous. Surely if you’re Rishi Sunak you have to hope that something will turn up.”

Nevertheless politicians from all parties have in the last week again started discussing the prospect of a general election to coincide with local elections on May 2.

Sunak would have to request a dissolution of parliament by March 26 to trigger the poll. “We’ve been told to cancel all leave until that date,” said one Liberal Democrat campaign official.

Labour thinks that Hunt’s Budget could be the starting gun for a May election, offering tax cuts that would kick in at the start of the financial year on April 5.

Starmer’s party is also braced for Hunt to adopt some of Labour’s revenue- raising policies and using the money to fund his tax cuts, thus forcing the opposition party to explain how it would pay for its spending plans.

“We have to be able to adapt to that — that will be our challenge next week,” said a senior Labour adviser. “But we will have our own counter-strategy.”

The party thinks that during the course of the next few weeks inflation will continue its downward fall, offering Sunak the chance to say that his plan is working and that Starmer could ruin it.

Labour also expects Sunak to have his Rwanda migration legislation on the statute book on March 20, with the possibility of the first deportation flights of asylum seekers around mid-April.

“If a flight takes off then GB News will be covering it like it’s the moon landing,” said a Starmer ally. “If the European Court of Human Rights blocks it, then they would run a different kind of campaign.”

The final argument for a May election is that Sunak will suffer a drubbing in local elections on May 2, after which right-wing rebels could mobilise. “After May 2, all I see is risk,” admitted a Tory adviser.

But an ally of Sunak said: “It’s up to Labour what they do — we’ve been clear we are working on the basis of [an election in the] autumn.”

Hunt received the final fiscal forecasts from the Office for Budget Responsibility on Friday, providing the backdrop for final Budget policy decisions to be taken in conjunction with Sunak.

The chancellor would like to cut national insurance for workers by 2p — at a cost of £10bn. Sunak said on Friday he also liked NI cuts because the levy was a “tax on work” and — unlike income tax — a reduction would apply across the whole UK. Each 1p cut in income tax costs about £7bn.

Adopting Labour’s plan to scrap or scale back the non-domiciled tax status might raise between £2bn-£3bn. Labour claims its plan to extend the windfall tax on oil and gas companies would raise £10.8bn over five years.