Hunt is on the morning round and the focus is on yesterday’s claim it is his “long term ambition” to end the “unfairness” of National Insurance and income double taxation. Welcome idea, but that’s a big promise…
On Times Radio this morning Hunt started rowing back: “That’s a huge job. It raises an enormous amount of money. And I don’t think it’s realistic to say that’s going to happen any time soon.” When asked by Kay Burley on Sky whether he wanted the tax abolished he said “we want to end that unfairness over time… but yes I think that it is wrong that we tax work twice while we tax other forms of income only once” before suggesting abolition is “not the only way that you can end that unfairness, you can merge income tax and national insurance.” Unusually messy for Hunt…
Labour is obviously jumping on this. On Rachel Reeves’ counter-round she is claiming an NI abolition is an unfunded tax cut of £46 billion, bigger “than what even Liz Truss and Kwasi Kwarteng floated when they did their mini-budget a year and a half ago.” Kwasi and Liz will be having a chuckle this morning…
Westminster’s thinks tanks have delivered their verdict on Hunt’s Spring Budget, which, if anything, has calmed rumours swirling in SW1 about a May election. There are positive notes when it comes to the tax cuts and reforms that were made, though the message is clear: more is needed. Opportunities to set out a retail offer are running out…
The Adam Smith Institute’s Director of Research, Maxwell Marlow, says “it’s encouraging that the Government understands the overwhelming need to cut taxes from the current record high, and the benefits that doing so brings to individuals, families and businesses. To really unlock the UK’s potential, the Government must now turn to serious supply side reforms, most importantly by allowing new houses to be built for current and future generations.” With property capital gains tax cut, allowing more homes to actually be built is a logical next step…
Institute of Economic Affairs Executive Director Tom Clougherty says “it hasn’t really moved us any closer to where we need to be“. He adds that it “didn’t really address the UK’s long-term fiscal challenges, particularly around the impact of an ageing population. On the other hand, it did highlight the absurdity of setting tax policy based on highly variable five-year debt forecasts. Fiscal rules should be a good thing, but the way we’re using them makes no sense at all.”
Chief Executive of the TaxPayers’ Alliance John O’Connell says taxes need to keep going down: “Alongside some wins for motorists, pub-goers and workers it was encouraging to hear the chancellor talk about a simpler tax system, given much of the pressure on taxpayers comes from complexity. That said, taxes overall are still set to increase. The government must prioritise cutting the tax burden, and to do that there must be a much firmer grip on the cost of government crisis.” Chance would be a fine thing, when Hunt boasts about increasing government spending…
Douglas McWilliams, Co-Chairman of the Growth Commission, notes that the OBR has “produced numbers post-budget to show GDP per capita will be ¾ a per cent lower in 2028. Per household these numbers are a £376 increase in 2024-25 and a £1,036 increase in 2028-29. So whether this is a budget for growth is questionable.” Something that Labour will be keen to point out…
Karl Williams, Centre for Policy Studies Research Director, struck a positive note, saying: “Cuts in taxation are always welcome and it was good to see the Chancellor address the inequity of the child benefit tax charge. It was also good to see Treasury have been listening to the CPS when it comes to using the sale of NatWest shares to boost share ownership in the UK.”
Tory wet think tank Onward’s Director Seb Payne is more positive, saying “Jeremy Hunt has made the best of a bad hand. Raising the income threshold for child benefit and cutting national insurance are hugely welcome moves to boost growth, help more people into work, and support families. But the most welcome news today was that inflation will fall to 2% a year ahead of the Government’s target.” Payne adds that “more is needed ahead of the election“.
The reaction from the government’s own isn’t so positive. Furious Scottish Tory leader Douglas Ross says the oil and gas windfall tax extension is “a step in the wrong direction” while energy minister Andrew Bowie says “the extension of the EPL is deeply disappointing.” When your own minister comes out against the budget…
Starmer took to the despatch box to rail against the Chancellor’s uninspiring budget. He blasted the highest tax burden in 70 years under the Tories, sustaining LOTO’s line of the “Tory con“. While he conceded Labour will support the cuts to National Insurance, he mocked the fact the Tories stole Labour’s policy of scrapping the non-dom tax regime, proving the Tories “have run out of ideas“. Starmer’s summary of the “chuckle brothers’” budget is: “give with one hand, taken even more with the other“, concluding that there’s nothing the Tories can do to change their record. He finished by demanding a confirmation of what many hacks are asking: when will the election be held?
Hunt is unveiling his budget after weeks of downgraded “headroom” projections, long deliberations with Sunak, and a less tumultuous briefing run than the Autumn Statement. The latest OBR forecasts: Inflation projected to fall to below 2% in a few months time (a year earlier than expected). That includes a 0.8% rise in real household disposable income. The OBR predicts that debt will fall every year to 94% of GDP in 2028/9. Their growth forecasts are revised upwards, at 0.8% this year and peaking at 2.2% in 2026. Characteristically ‘reliable’ forecasts from the OBR…
Guido gives you the measures in full:
Confirmation of expectations. This isn’t an election budget…
A series of Treasury briefings over the past few weeks paints a picture of a budget that looks very much like it’s designed to whack wealth – a surprising budget in this respect from fiscal hawks and multimillionaires Sunak and Hunt. Tory donors will be coughing on their cornflakes as non-dom status is abolished (a straight Labour policy) – confirmed in a briefing to the FT this morning. Has CCHQ checked how many are non-doms?
Government insiders are asking: is the move prompted by Sunak’s embarrassment at his own family finances ahead of a rough campaign? Far from defusing an electoral issue, will only raise the issue up the agenda for Labour to exploit…
There are severe measures – pushed by team Gove – coming to punish the owners of short term holiday lets – Oxford Economics says short term lets contributed more than £27.7 billion to the UK economy and support more than 50,000 jobs. Business class flight taxes will also be hiked. Don’t mention the fact the taxpayer funded £600,000 of these flights for ministers in the past six months…
Far from outflanking Labour in a genius judo move, Tory MPs and wonks fear these moves will simply shift the conversation onto Labour’s ground. Labour will be delighted with a Budget they can claim is at least partly what they would do – only that they would go further. All while making the point that the Tories have sustained these policies for more than a decade before today’s change of heart. Hunt has previously compared himself to Nigel Lawson – no one believes that now…
The Growth Commission have come out swinging against the Office for Budget Responsibility (OBR) as its forecast ahead of the budget, which, as usual, predicts a limited “headroom” for the Chancellor. Foretelling doom and gloom results in a tightened Treasury and squeezed taxpayers’ wallets…
The group has come out with an alternative forecast. If public sector productivity is brought back to pre-Covid levels, they project £60 billion of headroom over 4 years. Douglas McWilliams, co-chairman of the Growth Commission, tells Guido:
“OBR has claimed that the big rise in public spending caused by the loss in productivity is baked in, we reject that notion and we also believe it’s not the OBR’s role to make that kind of judgement on policy matter in public. Their forecasts haven’t been brilliant, we do not think its the case that we should assume high spending . It is not their role as a non-partisan body to get involved in political decision making.”
The Chancellor should just look back at Guido’s continued coverage of the OBR’s credibility deficit. A reminder: the sum total of growth misjudgements in the OBR’s one-year budget forecasts is £558 billion between 2010 and 2023. Even the OBR’s chairman Richard Hughes recently came out conceding their forecasts are a “work of fiction”. And that’s not the first time they’ve admitted their numbers – which lead to the beancounters taking more money off your paycheque – are wrong…
When the OBR predict tax cuts will “cost” too much, it’s no wonder our economy is stalling. If the Tories truly want to promote growth, they’ll need to get rid of their own creation…
