George Osborne has warned that he would be forced to introduce an emergency Budget with tax hikes and spending cuts if the UK votes to leave the European Union – prompting pro-Brexit Conservative MPs to say they would block such a move.
The chancellor argued the Treasury would be forced to unveil a Budget after the vote on 23 June, in order to make up for a £30bn "black hole" created by leaving the EU, with the figure comprised of £15bn of tax rises and £15bn of spending cuts.
Osborne will appear alongside Labour's Alistair Darling on Wednesday, with the former chancellor set to claim he is more worried about Britain’s finances if the country pulls out of the EU than he was at the time of the financial crash in 2008. Possible tax rises Osborne will outline include a 2p rise on the basic rate of income tax and a 3p in the higher rate, as well as raising inheritance tax by 5p.
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The current and former chancellors will say spending on police, transport and local government could take a 5% cut, while another 5% rise on alcohol and fuel duties could be introduced.
They will also say the ring-fenced NHS budget could be "slashed", and raise the prospect of fresh cuts to education and defence spending. To substantiate their claims, the politicians will cite research by the Institute for Fiscal Studies that warned leaving the EU could lead to an extra two years of austerity.
But 57 Conservative MPs, including former Cabinet ministers Iain Duncan Smith and Owen Paterson, have already put their name to a letter condemning the chancellor for threatening to renege on Tory manifesto commitments on the public finances.
They said in a statement: "We do not believe that he would find it possible to get support in parliament for these proposals to cut the NHS, our police forces and our schools.
"If the chancellor is serious then we cannot possibly allow this to go ahead. It would be unnecessary, wrong and a rejection of the platform on which we all stood.
"If he were to proceed with these proposals, the chancellor's position would become untenable. This is a blatant attempt to talk down the market and the country. The chancellor risks doing damage to the British economy in his bid to win this political campaign."
Speaking on the Today programme after the letter emerged, Osborne defended his warning of spending cuts and tax rises, saying Brexit would bring with it "chaos" in the UK's public finances.
"Let’s be clear, no Conservative wants to raise taxes, least of all me. But equally Conservatives understand and indeed I suspect many Labour politicians understand, that you cannot have chaos in your public finances," he said.
"You have to deal with the hole that would emerge if we quit the EU and we would have to take the necessary measures."
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