Hunt promises ‘permanent cuts in taxation’ in pre-election Budget

Jeremy Hunt has said “lower tax means higher growth” as he promised “permanent cuts in taxation” for families on the eve of his Budget, expected to feature a 2p cut in national insurance.

The Chancellor said Prime Minister Rishi Sunak’s Government’s plans “mean more investment, more jobs, more productive public services and lower taxes”, and he accused Labour of having “no plan” and the Liberal Democrats of having “no principles”.

His headline measure on Wednesday looks likely to be a cut in national insurance by a further two percentage points, as he tries to revive the economy and boost the Tories’ dire poll ratings ahead of this year’s general election.

Mr Hunt is widely reported to have opted to cut national insurance rather than reduce income tax, which is more expensive but better understood by many voters.

He 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.

The change could save the average worker £450 a year, adding up to £900 when combined with the 2p national insurance cut announced in last year’s autumn statement.

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

Chancellor Jeremy Hunt

Mr Hunt did not confirm the move in pre-Budget comments released by the Treasury, but reiterated the Government’s focus on reducing the tax burden amid clamouring from Tory MPs.

Touting the Conservatives’ economic record, he said: “Of course, interest rates remain high as we bring down inflation.

“But 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, Mr Hunt will use his Budget to set electoral dividing lines with Sir Keir Starmer’s party.

The Chancellor claimed that a Labour government would “destroy jobs with 70 new burdens on employers, reduce opportunities by halving new apprenticeships and risk family finances with new spending that pushes up tax”.

“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” with the overall tax burden still rising.