2p cut in national insurance as Jeremy Hunt prepares to reveal full spring budget

Good morning. Looking at some of the newspaper front pages this morning, you might assume that it’s all done, and that today’s budget is a “good news” event for the Conservative party (which is in such a dire plight it may have forgotten what good news is).

Wednesday’s DAILY EXPRESS: Hunt’s tax cut gamble will put £900 in workers’ pockets#TomorrowsPapersToday pic.twitter.com/m1aDPJoZ7O

— Jack Surfleet (@jacksurfleet) March 5, 2024

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Wednesday’s DAILY TELEGRAPH: Tax cuts spark election talk#TomorrowsPapersToday pic.twitter.com/owfocEnPM0

— Jack Surfleet (@jacksurfleet) March 5, 2024

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Wednesday’s TIMES: Hunt looks to win over voters with £900 tax cut#TomorrowsPapersToday pic.twitter.com/VxsbZmJIcP

— Jack Surfleet (@jacksurfleet) March 5, 2024

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From what we know, it seems as if Jeremy Hunt is going to test the “election bribe” approach to politics to destruction with a giveaway budget that he hopes will revive his party’s fortunes by anaesthetising memory of the very large tax increases the government has already imposed since 2019, and setting a campaign trap for Labour.

But there are three big questions yet to be answered.

First, is a 2p cut in national insurance the main story of the budget, or is there something much bigger to come? The 2p cut is now established as fact, but it is not entirely clear whether that is because the Treasury wanted the news out before the budget, or whether it was just forced into confirming what diligent reporting had uncovered. Budgets normally focus on tax changes taking effect in the budget year. But Rishi Sunak is also on record as wanting to cut income tax eventually to 16p in the pound, and sometimes chancellors announce tax cuts they plan to make a year or more in advance. Will we get some of that today?

Second, how will Labour react? Hunt will probably fund his tax cut by lifting two of the four tax increases proposed by Labour (which the Tories used to oppose) and by cutting plans for public spending after the election. Many in the Labour party would love to see Starmer promise to reverse any such cuts when he responds to the budget statement. But Starmer wants to fight the general election on terms set by Labour, not Hunt, and so he is unlikely to leap into such an obvious elephant trap. We might not get the full, considered Labour response today, but we will find out in what direction they are heading.

The final question is, if this is the most nakedly partisan budget of recent times, will it work? We certainly won’t know for sure today, but by 6pm we might be better placed to have a guess.

Here is our overnight story on the budget by Kiran Stacey, Pippa Crerar and Phillip Inman.

And here is Phillip’s guide to what to expect from the budget.

My colleague Graeme Wearden will be joining me later from the business blog, and we will be covering the budget in full, and then focusing on reaction and analysis.

Here is the agenda for the day.

8.30am: Rishi Sunak chairs cabinet, where Jeremy Hunt will brief ministers on what’s in the budget.

12pm: Rishi Sunak faces Keir Starmer at PMQs.

12.30pm: Hunt delivers his budget statement in the Commons. The speech will last about an hour, and when it finishes the budget red book, the Office for Budget Responsibility’s analysis, and all the other budget documentation will be published on the Treasury and OBR websites.

2.30pm: Richard Hughes, chair of the OBR, holds a press conference.

5pm: Hunt addresses a meeting of the backbench Conservative 1922 Committee.

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There is a long history of governing parties cutting taxes in budgets just before general elections, and new governments (often from the same party) whacking them up again in the first budget after polling day. Jeremy Hunt is obviously in election bribe mode today, but this chart, from the Institute for Fiscal Studies thinktank, which covers fiscal events up to last year’s autumn statement, suggests that what he is doing is not unprecedented. Denis Healey did something similar before the 1979 election, which Labour lost, and Geoffrey Howe before 1983, which the Tories won.

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changes before elections”,”caption”:”Tax changes before elections”,”credit”:”Photograph: IFS”}}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1709721883000,”blockCreatedOnDisplay”:”05.44 EST”,”blockLastUpdated”:1709722607000,”blockLastUpdatedDisplay”:”05.56 EST”,”blockFirstPublished”:1709722607000,”blockFirstPublishedDisplay”:”05.56 EST”,”blockFirstPublishedDisplayNoTimezone”:”05.56″,”title”:”How taxes go down and up before and after general elections”,”contributors”:[],”primaryDateLine”:”Wed 6 Mar 2024 05.56 EST”,”secondaryDateLine”:”First published on Wed 6 Mar 2024 04.35 EST”},{“id”:”65e83a128f08bec6f4ed6e1c”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Retaining the fuel duty cut in the budget is a regressive policy that benefits the wealthiest in society, who will save £60 a year, while those who earn the least will save just £22, according to analysis. Helena Horton has the story here.

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Good morning. Looking at some of the newspaper front pages this morning, you might assume that it’s all done, and that today’s budget is a “good news” event for the Conservative party (which is in such a dire plight it may have forgotten what good news is).

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Wednesday’s DAILY EXPRESS: Hunt’s tax cut gamble will put £900 in workers’ pockets#TomorrowsPapersToday pic.twitter.com/m1aDPJoZ7O

— Jack Surfleet (@jacksurfleet) March 5, 2024

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Wednesday’s DAILY TELEGRAPH: Tax cuts spark election talk#TomorrowsPapersToday pic.twitter.com/owfocEnPM0

— Jack Surfleet (@jacksurfleet) March 5, 2024

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Wednesday’s TIMES: Hunt looks to win over voters with £900 tax cut#TomorrowsPapersToday pic.twitter.com/VxsbZmJIcP

— Jack Surfleet (@jacksurfleet) March 5, 2024

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From what we know, it seems as if Jeremy Hunt is going to test the “election bribe” approach to politics to destruction with a giveaway budget that he hopes will revive his party’s fortunes by anaesthetising memory of the very large tax increases the government has already imposed since 2019, and setting a campaign trap for Labour.

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But there are three big questions yet to be answered.

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First, is a 2p cut in national insurance the main story of the budget, or is there something much bigger to come? The 2p cut is now established as fact, but it is not entirely clear whether that is because the Treasury wanted the news out before the budget, or whether it was just forced into confirming what diligent reporting had uncovered. Budgets normally focus on tax changes taking effect in the budget year. But Rishi Sunak is also on record as wanting to cut income tax eventually to 16p in the pound, and sometimes chancellors announce tax cuts they plan to make a year or more in advance. Will we get some of that today?

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Second, how will Labour react? Hunt will probably fund his tax cut by lifting two of the four tax increases proposed by Labour (which the Tories used to oppose) and by cutting plans for public spending after the election. Many in the Labour party would love to see Starmer promise to reverse any such cuts when he responds to the budget statement. But Starmer wants to fight the general election on terms set by Labour, not Hunt, and so he is unlikely to leap into such an obvious elephant trap. We might not get the full, considered Labour response today, but we will find out in what direction they are heading.

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The final question is, if this is the most nakedly partisan budget of recent times, will it work? We certainly won’t know for sure today, but by 6pm we might be better placed to have a guess.

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Here is our overnight story on the budget by Kiran Stacey, Pippa Crerar and Phillip Inman.

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And here is Phillip’s guide to what to expect from the budget.

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My colleague Graeme Wearden will be joining me later from the business blog, and we will be covering the budget in full, and then focusing on reaction and analysis.

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Here is the agenda for the day.

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8.30am: Rishi Sunak chairs cabinet, where Jeremy Hunt will brief ministers on what’s in the budget.

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12pm: Rishi Sunak faces Keir Starmer at PMQs.

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12.30pm: Hunt delivers his budget statement in the Commons. The speech will last about an hour, and when it finishes the budget red book, the Office for Budget Responsibility’s analysis, and all the other budget documentation will be published on the Treasury and OBR websites.

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2.30pm: Richard Hughes, chair of the OBR, holds a press conference.

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5pm: Hunt addresses a meeting of the backbench Conservative 1922 Committee.

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If you want to contact me, do try the “send us a message” feature. You’ll see it just below the byline – on the left of the screen, if you are reading on a laptop or a desktop. This is for people who want to message me directly. I find it very useful when people message to point out errors (even typos – no mistake is too small to correct). Often I find your questions very interesting, too. I can’t promise to reply to them all, but I will try to reply to as many as I can, either in the comments below the line; privately (if you leave an email address and that seems more appropriate); or in the main blog, if I think it is a topic of wide interest.

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ladders outside 11 Downing Street, where Jeremy Hunt will later stage his pre-budget photocall.”,”caption”:”Photographers’ ladders outside 11 Downing Street, where Jeremy Hunt will later stage his pre-budget photocall.
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Key events

How taxes go down and up before and after general elections

There is a long history of governing parties cutting taxes in budgets just before general elections, and new governments (often from the same party) whacking them up again in the first budget after polling day. Jeremy Hunt is obviously in election bribe mode today, but this chart, from the Institute for Fiscal Studies thinktank, which covers fiscal events up to last year’s autumn statement, suggests that what he is doing is not unprecedented. Denis Healey did something similar before the 1979 election, which Labour lost, and Geoffrey Howe before 1983, which the Tories won.

Jeremy Hunt has been talking about “great budgets” this morning. He did not quite say today’s would be in the list, but in a video broadcast on X this morning, the chancellor said:

Great budgets change history. The bit of history I want to change is to show people it is possible, if we stick to a plan through all the ups and downs, through all the challenges, it’s possible to have healthy growth, good public services, and to bring down taxes.

Reminder: the economy is in recession, polls suggest 80% of people think public services are in a fairly bad or very bad state, and at the autumn statement the OBR said taxes as a share of GDP were forecast to reach a postwar high in 2028-29.

We’re sticking to the plan. pic.twitter.com/kJefyMKndc

— HM Treasury (@hmtreasury) March 6, 2024

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Jeremy Hunt told colleagues what was in the budget at an early morning cabinet meeting, and some of them seemed pretty cheerful as they were photographed on the way out. They don’t always emerge from cabinet smiling like this. Perhaps they were told to look positive, or maybe they were just pleased by what they heard.

There has been a lot of commentary (eg here) over the last 24 hours about how cutting national insurance by 2p in the pound is unlikely to help the Tories because they tried that in the autumn statement and their poll ratings have not budged. But, as Stephen Bush points out in his Inside Politics briefing for the Financial Times, this argument ignores an important factor motivating Rishi Sunak. Bush says:

So how successful was the 2p tax cut? In terms of the Conservative-Labour battle, not at all. Since the last fiscal statement, the polls have if anything worsened for the Conservative party. On Monday, polling by Ipsos put Tory support at 20 per cent, the lowest level since its survey began in 1978. The Conservatives have lost three by-elections on the bounce. But in terms of the internal battle within the Tory party, the national insurance cut has done its job, in that Rishi Sunak is still prime minister.

That’s the important political context to understand when Hunt will essentially try to do the same thing with a further 2p cut in national insurance. He will also hope that scrapping the “non-dom” tax regime will cause problems for Labour.

On that last aim, he will surely get at least some joy: scrapping the “non-dom” regime is one of Labour’s few tax rises and it is intended to fund many of their promises. Whatever alternative the party rustles up instead may be unpopular or unworkable or both. As far as the country as a whole is concerned, cutting national insurance did not move the dial in November and I doubt it is going to do so in March. And a Budget that doesn’t move the dial may, in the end, fail in its other aim of protecting Sunak from internal revolt.

Harriett Baldwin, the Conservative MP who chairs the Commons Treasury committee, told LBC this morning that she “definitely” wants to see an increase in defence spending in the budget. That is also the view of Conservative party members, according to a survey by the ConservativeHome website published yesterday. It is assumed that Tory members want tax cuts above all, but the survey suggests that 74% of them think higher defence spending is more important. They said Jeremy Hunt should increase the defence budget “even if it leaves less room for tax cuts”.

UK fuel duty cut is regressive policy that benefits the wealthy, study finds

Retaining the fuel duty cut in the budget is a regressive policy that benefits the wealthiest in society, who will save £60 a year, while those who earn the least will save just £22, according to analysis. Helena Horton has the story here.

2p cut in national insurance as Jeremy Hunt prepares to reveal full spring budget

Good morning. Looking at some of the newspaper front pages this morning, you might assume that it’s all done, and that today’s budget is a “good news” event for the Conservative party (which is in such a dire plight it may have forgotten what good news is).

Wednesday’s DAILY EXPRESS: Hunt’s tax cut gamble will put £900 in workers’ pockets#TomorrowsPapersToday pic.twitter.com/m1aDPJoZ7O

— Jack Surfleet (@jacksurfleet) March 5, 2024

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Wednesday’s DAILY TELEGRAPH: Tax cuts spark election talk#TomorrowsPapersToday pic.twitter.com/owfocEnPM0

— Jack Surfleet (@jacksurfleet) March 5, 2024

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Wednesday’s TIMES: Hunt looks to win over voters with £900 tax cut#TomorrowsPapersToday pic.twitter.com/VxsbZmJIcP

— Jack Surfleet (@jacksurfleet) March 5, 2024

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From what we know, it seems as if Jeremy Hunt is going to test the “election bribe” approach to politics to destruction with a giveaway budget that he hopes will revive his party’s fortunes by anaesthetising memory of the very large tax increases the government has already imposed since 2019, and setting a campaign trap for Labour.

But there are three big questions yet to be answered.

First, is a 2p cut in national insurance the main story of the budget, or is there something much bigger to come? The 2p cut is now established as fact, but it is not entirely clear whether that is because the Treasury wanted the news out before the budget, or whether it was just forced into confirming what diligent reporting had uncovered. Budgets normally focus on tax changes taking effect in the budget year. But Rishi Sunak is also on record as wanting to cut income tax eventually to 16p in the pound, and sometimes chancellors announce tax cuts they plan to make a year or more in advance. Will we get some of that today?

Second, how will Labour react? Hunt will probably fund his tax cut by lifting two of the four tax increases proposed by Labour (which the Tories used to oppose) and by cutting plans for public spending after the election. Many in the Labour party would love to see Starmer promise to reverse any such cuts when he responds to the budget statement. But Starmer wants to fight the general election on terms set by Labour, not Hunt, and so he is unlikely to leap into such an obvious elephant trap. We might not get the full, considered Labour response today, but we will find out in what direction they are heading.

The final question is, if this is the most nakedly partisan budget of recent times, will it work? We certainly won’t know for sure today, but by 6pm we might be better placed to have a guess.

Here is our overnight story on the budget by Kiran Stacey, Pippa Crerar and Phillip Inman.

And here is Phillip’s guide to what to expect from the budget.

My colleague Graeme Wearden will be joining me later from the business blog, and we will be covering the budget in full, and then focusing on reaction and analysis.

Here is the agenda for the day.

8.30am: Rishi Sunak chairs cabinet, where Jeremy Hunt will brief ministers on what’s in the budget.

12pm: Rishi Sunak faces Keir Starmer at PMQs.

12.30pm: Hunt delivers his budget statement in the Commons. The speech will last about an hour, and when it finishes the budget red book, the Office for Budget Responsibility’s analysis, and all the other budget documentation will be published on the Treasury and OBR websites.

2.30pm: Richard Hughes, chair of the OBR, holds a press conference.

5pm: Hunt addresses a meeting of the backbench Conservative 1922 Committee.

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