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Jeremy Hunt, chancellor, has declared he wants to cut taxes again in the autumn, in an electioneering speech in which he claimed Labour would have to raise taxes to fill a £10bn annual “black hole” in its spending plans.
Hunt said he hoped to cut national insurance rates again in an Autumn Statement, as he moved to put tax at the centre of the Conservatives’ attempt to seek re-election later in the year.
The chancellor has cut national insurance from 12p to 8p in the last two fiscal events, and allies say he wants to reduce the rate to 6p in the autumn, if financial circumstances allow.
“If we can afford to go further, responsibly, to reduce the double tax on work this autumn, that is what I will do,” Hunt said. Much depends on whether the economy continues to rebound in the next few months.
Hunt’s salvo caps a week that has seen Prime Minister Rishi Sunak warn of Labour’s security risk and opposition leader Sir Keir Starmer launch a “pledge card” as both parties move on to a campaign footing.
With Labour typically leading the Conservatives by 20 points in opinion polls, Hunt and Sunak are focusing their fire on their political opponents.
Hunt’s speech in central London was given against a red backdrop that made no mention of the Conservatives, but focused on “Labour’s tax rises”. The chancellor talked openly about the prospect of a Labour government.
At the heart of Hunt’s speech was a claim that Labour had unfunded spending commitments amounting to £10bn a year by 2028-29, based on Treasury costings of 50 of the opposition party’s policies.
He argued these could mean taxes rising by £2,100 per working household under a Starmer administration.
Such costings are highly contentious, as they require impartial officials to answer questions based on assumptions crafted by political advisers.
Hunt claimed the findings were based on “extremely cautious” assessments of Labour policy, and that Treasury officials would give the same advice to an incoming Labour chancellor.
The Labour policies studied range from the decarbonising of the electricity grid to a teacher retention payment, bus service reforms and the hiring of new planners and GPs.
A Labour spokesman poured scorn on the whole exercise, calling it “desperate”.
He added: “All of Labour’s policies are fully costed and fully funded. Unlike the Conservatives who crashed the economy, Labour will never play fast and loose with the public finances.”
Labour retaliated by highlighting Hunt’s ambition to abolish national insurance altogether over an unspecified timescale, claiming it would be at the expense of pensioners.
In a sign of the likely ferocity of the election campaign to come, Hunt said: “It’s a lie, a disgrace to try to win this election by scaring pensioners.” He said a Tory government would axe national insurance contributions only when it was affordable.
Hunt’s attack comes against a backdrop of improving economic news, with UK GDP growing 0.6 per cent in the first quarter — faster than other major European countries — and with inflation expected by some economists to fall below the Bank of England’s 2 per cent target next week.
Despite taxes in the UK having risen to a post-war high during the last parliament, Hunt said the Conservatives would cut taxes in the next one.
“Come the election, tax revenues will be 3.9 per cent of national income, or around £100bn, higher than at the time of the last election,” the Institute for Fiscal Studies said at the time of Hunt’s March Budget.