Jeremy Hunt eyes national insurance cut to pull Tories back from heavy electoral defeat

The Chancellor is set to cut National Insurance by 2p in today’s budget in an attempt to boost Tory hopes in the next general election.

Jeremy Hunt will unveil his Spring Budget later today, with reports that he will make at least one major tax cut to turn around support for his party which has fallen to its lowest in half a century according to recent polls.

Both Downing Street and the Treasury refused to comment on speculation over the budget, after The Times reported that the cut to NI, worth £450 to the average voter, was preferred over substantial cuts to income tax amid fears it could drive up inflation.

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The amount of money available for tax cuts, or fiscal headroom, is thought to have dropped following assessments by the Office for Budget Responsibility (OBR).

Jeremy Hunt will announce the 2024 Budget later today.Jeremy Hunt will announce the 2024 Budget later today.
Jeremy Hunt will announce the 2024 Budget later today.

However, the 2p reduction is not expected to avoid the tax burden reaching record levels by the end of the decade, with those on £50,000 set to be the biggest winners from the move.

Adam Corlett, principal economist at the Resolution Foundation, said: “There are huge questions about whether Britain can really afford £20 billion of tax cuts this year, given the insufficient outlook for public spending and the need to reduce our national debt.”

The Chancellor is set to place priority on a “long-term plan for growth”, as he has with previous budgets, in addition to noting that the UK needs higher wages and living standards, and an economy that cannot be driven by high immigration.

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He is expected to say: “In recent times the UK economy has dealt with a financial crisis, a pandemic and an energy shock caused by a war on the European continent.

“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.”

It is hoped that the move will help the Conservatives gain ground on Labour ahead of the next election, with polling by Ipsos suggesting that Rishi Sunak’s party is polling at just 20 per cent, the lowest level recorded since 1978.

Rachel Reeves, Labour’s shadow chancellor, said: “This Budget should be the final chapter of fourteen years of economic failure under the Conservatives that has left Britain worse off.

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“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.”

Though voters are expected to go to the polls in the Autumn of this year, yesterday Labour fueled speculation that an election could be held as soon as May.

Jonathan Ashworth, a shadow minister, bet Sky News’ Kay Burley £10 live on air that Mr Sunak will call an election in May, saying that “everything the Conservatives are doing in terms of both their advertising on social media and the political positioning suggests to me that May is their preferred choice”.

“I think it’s going to be May. And I think Rishi Sunak now needs to name the date because there’s so much uncertainty,” he added.

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The announcement comes as new polling suggests that the cost of living crisis in Yorkshire is causing financial strain for at least two thirds of families.

The polling commissioned by the 38 Degrees campaign group found that 34 per cent of people in the region were making cutbacks, while a further 23 per cent said they were worried about their financial future.

Some 6 per cent of people said that they currently were “financially desperate” and could not afford essentials, leading them to skip meals or miss rent payments.

Matthew McGregor, the groups’s CEO, said that the findings painted a “grim picture” about what the cost of living crisis was like for families in Yorkshire.