Here’s a question: would an extra £17.31 a week persuade you to back the Tories over Labour?
That’s what Jeremy Hunt appears to be counting on. Ahead of the Budget tomorrow (potentially the last before the general election), the Times reports that the Chancellor intends to cut the main rate of National Insurance by 2p.
It’s the same trick he tried in the Autumn Statement last November, a measure which took effect in January. Hunt is set to argue that these two cuts combined (a reduction from 12 per cent 8 per cent) will leave the average worker £900 a year better off. An impressive sounding figure? Maybe, until you realise that’s £17.31 a week.
Higher earners, of course, will enjoy a greater windfall, while those whose finances are the most precarious will get very little at all. But politics is all about averages, so: will Hunt’s tax cut be enough to move the electoral dial?
It’s difficult to see how. Rishi Sunak wants to fight the general election on the economy, pinning his hopes on voters feeling more financially secure now than they did when he became prime minister in 2022 and giving his government the credit. But the combined impact of inflation, higher energy bills and council tax rises (not to mention the frozen tax thresholds which drag more people into higher tax brackets) will far outweigh this belated boost for most households. Following the Autumn Statement, the Institute for Fiscal Studies estimated that households would be £1,900 poorer at the end of this parliament than they were at the start. That’s a big gap for the Chancellor to try to bridge, even before we consider the wider state of the nation’s finances.
Because that’s the other problem with the planned NI: it will largely be paid for through yet more cuts to public services. Poll after poll shows that the Tories are out of step here: voters prioritise funding public services over tax cuts. Even among Conservative voters, just one in five favour lower taxes over maintaining or increasing public spending. At a time when Britain’s public infrastructure is literally crumbling and many services are at a breaking point, voters are unlikely to be distracted by a few extra pounds. Not when they can’t get a GP appointment, or when their local bus route has been cut, or the trains are too unreliable to get to work, or their elderly parents can’t get social care, or the ceiling of their child’s school is falling down.
Indeed, Hunt should know this. The Autumn Statement NI cut was implemented before the new tax year began, so voters could feel the benefits in January instead of waiting until April. The Tories crossed their fingers for a boost in the polls. But it didn’t come. Instead, support for the Conservatives has fallen to its lowest level since Liz Truss’s premiership (with one Ipsos poll putting them on all-time low of 20 per cent).
The definition of insanity, as Albert Einstein almost certainly did not say, is doing the same thing over and over again and expecting a different result. It’s tempting to put Sunak and Hunt in this category, delusionally pulling a lever they’ve tried before. But the move makes sense on two levels, as long as you realise the intended audience isn’t the electorate.
Ask Tory insiders about the mood of MPs ahead of the Budget and the word that comes up again and again is “resigned”. Whatever they might say publicly, all know deep down that, barring a truly remarkable event (Russia invading the UK, say), the next general election isn’t salvageable. Nothing Sunak or Hunt do will make much of a difference. This will be a “just about managing” Budget – in the sense that Tory MPs need enough cover to just about manage to campaign. They need something that will allow them to boast on the doorstep and on social media that the party cares about working people.
The other trick enabled by the NI cut is to make it even harder for an incoming Labour government to do anything at all. Both this cut and November’s are enabled by future spending cuts that are widely regarded as fictitious (unprotected departments would face real-terms per-capita cuts of 17 per cent). That doesn’t matter to ministers, as this will soon be Labour’s problem. This isn’t just about tying Rachel Reeves’ hands after the election, but limiting what Labour can put in its manifesto without promising significantly higher taxes or higher borrowing.
Is it still insanity to offer a tax cut that will damage the public finances just to damage your opponents and give your MPs a line to put on their leaflets? You could argue so – and no doubt Labour will do so in its post-Budget response. But in what is essentially a year-long election campaign, it makes its own kind of perverse sense.
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