Jeremy Hunt, the Chancellor, is set to announce a 2p cut in national insurance for 27 million workers in his upcoming spring budget.
This move is aimed at making work more financially rewarding and offering more opportunity and prosperity.
The tax cut, which will come into effect in April, is part of a £10 billion package and will be combined with the existing 2p cut in national insurance announced in the Autumn Statement last November.
Hunt’s decision to cut national insurance rather than income tax was made because it is cheaper and more targeted. Cutting the headline rate of income tax would be significantly more expensive and would also benefit pensioners. Despite this tax cut, taxes are expected to rise to record levels by the end of the decade due to freezes in national insurance and income tax thresholds, which are considered stealth taxes.
The Chancellor’s budget will also include an extension of the fuel duty freeze at a cost of £5 billion and an £800 million plan to improve productivity in the public sector. There are discussions about cutting public spending increases after the next election, which could raise around £5 billion a year, although this would lead to accusations of a return to austerity.
Jeremy Hunt will frame his budget as part of the Conservatives’ long-term plan for growth, emphasizing stability in the economy and the government’s ability to provide permanent tax cuts. He will contrast his approach with that of Labour, accusing them of increasing borrowing to fund additional spending and imposing new rules on businesses. However, Labour’s shadow chancellor, Rachel Reeves, criticized the Conservatives’ economic record over the past decade, labeling it as “economic vandalism.”
