Spring Budget 2024: Hunt doesn’t rule out May election after £10bn tax cut
Jeremy Hunt has announced the rate of National Insurance (NI) will be cut from 10 per cent to 8 per cent in the Spring Budget – but refused to confirm when an election could be held – as the Tories aim to halt their decline in the polls.
The Chancellor unveiled the measure- worth £10bn – as the centrepiece of a pre-election package of measures aimed at winning back waning Tory support.
It also saw him scrap the current tax system for so-called non-doms, citing “Nigel Lawson’s… great tax reforming Budget of 1988” in what was seen as a pre-election trap for the opposition.
The status will be replaced by a residency-based system which will see new arrivals enjoy a more generous regime for the first four years – before transitioning to “pay the same taxes as other UK residents”.
But speaking to the BBC following the Budget, the Chancellor also refused to rule out a general election being held in May, calling it “a matter for the Prime Minister, it’s above my paygrade”.
Hitting back, shadow Chancellor Rachel Reeves said: “The Budget has lifted the lid on 14 years of Tory economic failure. Taxes are still rising, prices are still going up in the shops, and mortgages are higher.
“Nothing Jeremy Hunt has said today changes that. It’s time for change. It’s time for an election.”
And his own response in the Commons, Labour leader Sir Keir Starmer called the fiscal event the “desperate act of a party that has failed” and branded Sunak and Hunt “the chuckle brothers of decline”.
He added: “Britain in recession… the national credit card – maxed out. And despite the measures today, the highest tax burden for 70 years.”
Speaking to a packed Parliamentary chamber at lunchtime, Hunt, who also confirmed he would keep public service spending at the “planned one per cent” said: “Of course, interest rates remain high as we bring down inflation.
“But because of the progress we’ve made, because we are delivering the Prime Minister’s economic priorities, we can now help families we can now help families not just with temporary cost of living support, but 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: “The policies I announced today meaning more investment, more jobs, better public services, and lower taxes in a budget for long term growth.
“Keeping taxes down matters to Conservatives in a way it never has for Labour. We believe that in a free society. The money you earn doesn’t belong to the government. It belongs to you.”
He framed it as handing back £900 to the average taxpayer, taken in conjunction with the 2p NI cut announced in November which came into force in January, each cut individually worth £450.
The Chancellor also stated that the Conservatives’ “long-term ambition” was to end the “double taxation of work” via both income tax and NI.
“When it is responsible, when it can be achieved without increasing borrowing and when it can be delivered without compromising high quality public services, we will continue to cut NI as we have done today so we truly make work pay,” he said.
Hunt also said he would cut self-employed National Insurance from eight per cent to six per cent.
“Changes that make our system simpler and fairer. And changes that grow our economy by rewarding work,” he added.
However, in the context of fiscal drag – stealth tax rises via tax rates not matching wage growth – the Resolution Foundations warned high earners would be still £500 worse off.
Other measures included freezing alcohol duty until February 2025 in a bid to support hospitality, and the now traditional freezing of fuel duty for another year, while maintaining the 5p cut, worth £1bn.
However, there was a blow for smokers as Hunt confirmed “an excise duty on vaping products from October 2026” and a “one-off increase in tobacco duty… to maintain the financial incentive to choose vaping over smoking”.
While following calls from the Confederation of British Industry (CBI) and Make UK, Hunt confirmed he would bring forward legislation to make full expensing apply to leased assets, as well as upping the VAT registration threshold from £85,000 to £90,000 from April 1.
On pension funds, the Chancellor announced he would give “new powers to The Pensions Regulator and Financial Conduct Authority” to improve value and create new disclosure rules on UK/foreign investment.
There will also be a retail sale of Natwest shares by this summer at the earliest, while a new British Savings Bond and a brand new British ISA, worth £5,000 annually, will be created, he added.
Property taxes saw Hunt abolish the Furnished Holiday Lettings regime, as well as scrapping stamp duty relief for people who purchase more than one dwelling in a single transaction.
He also reduced the higher rate of property capital gains tax from 28 per cent to 24 per cent, and extended the “sunset on the Energy Profits Levy for an additional year to 2029 raising £1.5bn”.
The latest Office for Budget Responsibility (OBR) figures on inflation, the Chancellor revealed, indicate inflation is set to drop below two per cent “in just a few months time, nearly a whole year earlier than forecast in the autumn statement”.
Crucially, Hunt also said the OBR have forecast the government is set to meet its fiscal rules to have debt falling as a share of GDP within five years, giving the UK final year headroom against debt falling of £8.9bn.
The Budget – Hunt’s fourth fiscal event as Chancellor – came as the Conservatives hit record lows in the polls, in the face of a 27-point lead for the Labour Party.
Earlier this week, Ipsos found support for the party was at just 20 per cent – the lowest ever since the firm began its Political Monitor tracker in 1978.
Speculation has mounted in recent days that Prime Minister Rishi Sunak could opt to go to the country in May, to coincide with the local elections, following Conservative hopes flights to Rwanda could be taking off by late spring.
Hunt came under pressure ahead of the Budget to offer a retail package to voters in the hopes of winning back wavering Conservative support.
But despite the party framing the Budget as tax-cutting, according to the Institute for Fiscal Studies (IFS), over the past 14 years, the tax burden has risen to a record high.
In an interview with Sky News after the Budget, Hunt insisted the fiscal event was “absolutely not” the last throw of the dice before a general election.
“We have produced today a Budget that shows that we are turning a corner,” he said, adding he had “cut taxes decisively without increasing borrowing and protecting our public services”.
He also told the BBC: “The economy is improving and our plan to get the economy back on its feet after the invasion of Ukraine is working.
“Inflation is falling, growth is coming back and if we stick to that plan, we can see growth rates returning to the kind of levels we were used to before.”
Hunt added: “I hope to be back after the election and do many more budgets that reduce the pressure on ordinary families by bringing down the tax burden and improving our public services. And we made a good start today.”