Budget 2024: Will it be NI or Will it be Income Tax?

He
looks
likely
to
announce
a
cut
in
National
Insurance
by
a
further
2p
on
Wednesday,
matching
a
cut
already
made
in
the
Autumn
Statement
last
year.

The
change
could
save
the
average
worker
£450
a
year,
adding
up
to
£900
when
combined
with
last
year’s
move.

Hunt
was
widely
reported
to
have
defied
calls
from
some
in
Downing
Street
and
many
Conservative
MPs
to
reduce
income
tax,
which
is
more
expensive
but
better
understood
by
many
voters.

They
were
concerned
another
National
Insurance
reduction
would
not
be
enough
to
boost
Prime
Minister
Rishi
Sunak’s
party’s
dire
poll
ratings.
A
fresh
poll
suggests
support
for
the
Conservatives
is
at
its
lowest
ebb
in
46
years.

Hunt
was
said
to
have
taken
the
decision
after
the
fiscal
watchdog
the
Office
for
Budget
Responsibility
downgraded
the
amount
of
fiscal
headroom
available
for
delivering
tax
cuts
or
spending
commitments,
within
the
chancellor’s
self-imposed
rule
of
having
debt
falling
as
a
share
of
gross
domestic
product
by
2029.

An
income
tax
cut,
previously
promised
by
Sunak,
could
reportedly
still
feature
in
a
fiscal
event
later
this
year
or
in
the
Conservative
election
manifesto.

Two
former
home
secretaries
criticised
the
move,
with
Suella
Braverman
saying
“my
preference
would
be
2p
off
the
basic
rate
of
income
tax”
and
Priti
Patel
calling
for
the
unfreezing
of
income
tax
thresholds
altogether.

In
comments
ahead
of
his
budget,
Hunt
claimed:
“because
of
the
progress
we’ve
made,
because
we
are
delivering
on
the
Prime
Minister’s
economic
priorities,
we
can
now
help
families
with
permanent
cuts
in
taxation.

“We
do
this
not
just
to
give
help
where
it
is
needed
in
challenging
times.
But
because
Conservatives
know
lower
tax
means
higher
growth.
And
higher
growth
means
more
opportunity
and
more
prosperity.”

He
added
that
growth
“cannot
come
from
unlimited
migration”,
but
“can
only
come
by
building
a
high-wage,
high-skill
economy”.

With
polls
suggesting
Labour
is
on
track
to
win
the
general
election,
Hunt
will
use
his
budget
to
set
electoral
dividing
lines
with
Keir
Starmer’s
party.

He
repeated
the
Tory
attack
line
that
Labour
would
take
the
country
backwards,
saying:

“Instead
of
going
back
to
square
one,
our
plans
mean
more
investment,
more
jobs,
more
productive
public
services
and
lower
taxes,
sticking
to
our
plan
in
a
budget
for
long-term
growth.”

But
shadow
chancellor
Rachel
Reeves
said
Labour
is
“now
the
party
of
economic
responsibility”
as
she
accused
the
Tories
of
overseeing
“fourteen
years
of
economic
failure”.

She
said:
“the
Conservatives
promised
to
fix
the
nation’s
roof,
but
instead
they
have
smashed
the
windows,
kicked
the
door
in
and
are
now
burning
the
house
down.

“Taxes
are
rising,
prices
are
still
going
up
in
the
shops
and
we
have
been
hit
by
recession.
Nothing
the
chancellor
says
or
does
can
undo
the
economic
vandalism
of
the
Conservatives
over
the
past
decade.”

Labour
also
said
any
reductions
would
be
cancelled
by
the
government’s
continued
freeze
on
tax
thresholds,
meaning
more
people
are
taken
into
a
higher
band
as
their
pay
increases.
This
is
known
as
“fiscal
drag”.

Experts
said
that
a
2p
reduction
in
NI
contributions
would
not
by
itself
be
enough
to
stop
the
tax
burden
reaching
record
levels
by
the
end
of
this
decade.

The
Institute
for
Fiscal
Studies
said
the
measure
would
not
prevent
taxes
rising
to
about
37%
of
GDP
by
2028-29.

The
Resolution
Foundation,
a
think
tank
that
focuses
on
the
socio-economic
impact
of
policy
on
lower-income
households,
said
the
biggest
net
beneficiaries
of
the
NI
cut,
combined
with
threshold
freezes,
are
those
earning
£50,000,
while
those
earning
£19,000
or
less
will
actually
be
worse
off.

Hunt
has
said
he
will
not
pay
for
tax
cuts
with
borrowing,
meaning
a
combination
of
spending
cuts
and
tax
rises
elsewhere
will
be
necessary.

Tax
rises
could
include
a
levy
on
vapes,
a
tax
raid
on
owners
of
short-term
holiday
lets,
and
the
scaling
back
of
non-dom
tax
relief
–
a
policy
previously
advocated
by
Labour
and
opposed
by
ministers.

Shadow
health
secretary
Wes
Streeting
told

Sky
News
that,
if
the
Tories
steal
the
measure
“we’ll
have
to
look
at
other
alternatives”
to
fund
Labour’s
NHS
spending
plans
“because
we’ve
already
made
those
commitments”.

He
also
predicted
the
Prime
Minister
would
call
an
election
in
May,
although
Sunak
has
previously
signalled
polling
day
will
be
in
the
second
half
of
this
year.

A
possible
extension
of
the
energy
windfall
tax
faced
fierce
opposition
from
Scottish
Tory
leader
Douglas
Ross,
the

Telegraph
reported.

Hunt
could
also
shave
more
off
his
post-election
public
spending
plans
to
fund
giveaways,
reducing
overall
departmental
spending
–
currently
pencilled
in
to
rise
by
1%
per
year
in
real
terms
after
2025
–
to
0.7%.

Experts
have
warned
of
a
possibly
implausible
spending
squeeze
after
the
election
that
could
harm
strained
public
services.

In
a
sign
he
could
go
down
that
path,
Hunt
defended
austerity,
saying
it
was
only
because
the
government
“reduced
the
deficit”
that
it
could
“generously”
help
people
during
the
pandemic.

By
Sophie
Wingate,
PA
Deputy
Political
Editor

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