Jeremy Hunt delivered a highly political speech in Westminster, in which he hinted at a possible National Insurance cut before the general election. The chancellor defended the UK’s record tax levels, stating that they were necessary to cover the costs of protecting the public from pandemic costs and soaring energy bills. Hunt claimed that taxes would go up under a Labour government to plug a “black hole” in their economic plans.
Labour responded by insisting that its policies were “fully funded” and claimed that Hunt’s plan to eventually abolish National Insurance altogether would create a “black hole” in the UK’s finances. The backdrop to Hunt’s speech read “Labour’s Tax rises”. He said that if they could afford to do so responsibly, he would reduce the double tax on work this autumn. However, it remains unclear whether there will be an Autumn Statement, and the date of the next general election has not been announced yet.
The chancellor announced last year that 2p would be cut from National Insurance and announced it again in the spring budget. The government stated that the two combined cuts mean a worker on £35,000 will save about £900 a year. Although Hunt repeated his ambition to abolish national insurance, he avoided answering questions about the unfreezing of tax thresholds. This contributes significantly to people paying more tax because, as people have seen their pay go up, more have found themselves in higher tax bands as the thresholds have not increased.
Hunt attempted to frame the upcoming election as a choice between his party, who wanted to reduce the tax burden, and Labour, who he argued would increase taxes. Tax levels have increased under the Conservatives, something Mr Hunt blamed on the pandemic and cost of living support. He also criticised the Labour Party for trying to “scare pensioners” by misrepresenting his pledge to work towards abolishing National Insurance Contributions.
Labour has previously claimed that the pledge to abolish National Insurance is a £46bn unfunded tax plan, which poses a threat to the state pension. The Conservatives have produced calculations which Labour dismissed as a “dodgy dossier”. Rachel Reeves, Shadow Chancellor, said it’s a bit rich for Hunt to suggest that taxes would go up under a Labour government and stated that taxes under the Tories are at a 70-year high. Unlike the Conservatives, Labour claims that all of its policies are fully costed and fully funded
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