Chancellor Jeremy Hunt to meet Prime Minister Rishi Sunak for crunch talks as they try to find cash for 2p tax cut

Chancellor Jeremy Hunt is this weekend scrabbling to find the money to make a 2p cut in personal taxation in Wednesday’s Budget – and rescue the Tories election hopes in the process.

The Treasury had hoped to have around £30bn available for handouts, but unexpected rises in the cost of Government borrowing has reduced that to around £13bn, equivalent to a 1p cut in income tax and 1p off National Insurance.

Mr Hunt is exepcted to meet Prime Minister Rishi Sunak this evening (Sunday) to finalise the plans, which will include a crackdown on non-dom tax status and might include a tax on vaping, holiday lets or a further windfall levy on oil and gas companies, all in order to free up more mney for personal tax cuts.

Mr Sunak had hoped that a tax-cutting Budget would finally help the Tories to reel in Sir Keir Starmer’s daunting opinion poll lead, and put the economy on a buyoant path towards a second giveaway Budget in the autumn before a general election.

Rishi Sunak had hoped that a tax-cutting Budget would finally help the Tories to reel in Sir Keir Starmer ‘s daunting opinion poll lead. Rishi Sunak addressing the nation outside Downing Street

However, some Tory MPs warn against ‘waiting for something to come along’, pointing out that big bills were coming down the track for issues such as the infected blood scandal, which could top £11 billion – just as hundreds of thousands of voters are coming off fixed-rate mortgages and on to more expensive deals.

There is a growing division between Conservatives who think the Prime Minister should wait until the autumn and those who think he should go to the country now while Labour is divided over its Gaza policy – and before Migel Farage’s Reform Party eats even further into its support.

The Mail on Sunday revealed last month, meetings have been held in government offices to make contingency arrangements for an Election on May 2, the same day as the local elections. Labour has long suspected that the Prime Minister might call a snap Spring election, despite him delcaring earlier this year that his ‘working assumption’ was that it would held in the second part of this year.

Both No.10 and No.11 deny claims made last week by former chancellor George Osborne that there there is friction between Mr Hunt and Mr Sunak over what cuts to make

Members of ‘Team May’ also point out that legal migration figures due to be published at the end of May are expected to be ‘a horror show’ for No.10, and that it is likely to be another summer dominated by coverage of migrants making small boat crossings from France.

The Chancellor has expressed his frustrations about his limited room for movement at a meeting with the One Nation group of moderate Tory MPs.

A source said: ‘He was very much trying to dampen down expectations,’ The MPs pointed out that the 2p which Mr Hunt cut from national insurance contributions (NICs) in his autumn statement had not ‘cut through’ to voters despite its £22bn cost; the measure was preferred by the Chancellor because it is less inflationary than an income tax cut. But it is also less electorally effective.

Both No.10 and No.11 deny claims made last week by former chancellor George Osborne that there there is friction between Mr Hunt and Mr Sunak over what cuts to make.

Is it time to put money on a May Election? Page 14