Budget 2024: Jeremy Hunt cuts National Insurance and reforms child benefit but tax burden still climbing

Labour has just sent out a release claiming that in every fiscal event (budget or autumn statement) over the last decade the government has promised higher wages, higher skills and higher growth.

It says: "Despite the promises by successive Tory Chancellors, Britain is worse off – with higher taxes, lower wages and stagnant economic growth." The government would probably argue that wages are higher literally, in part due to inflation, however the tax burden is at its highest level since the Second World War and we're in a recession. Officials would certainly point to the pandemic and Russia-Ukraine energy crisis, however there is no doubt our economy is underperforming.

Labour points to the last fiscal event, when Hunt said: "Today’s Autumn Statement for growth.” However, since then the economy has gone into a recession. Whether the Labour Party can turn around our spluttering economy if they win the next general election is another question.

Speaking of Labour, Jeremy Hunt is expected to copy several opposition policies as he tries to raise money to fund tax cuts. In particular, Treasury officials are eying up reforms to the non-dom status, which allows wealthy individuals with earnings overseas to pay less tax.

This is something Rishi Sunak’s wife Akshata Murthy previously benefited from and the Chancellor previously said that abolishing the exemption would be “wrong” and drive high-earners out of the country. However, with money tight, this is being reassessed. 

There is also a political motive for doing this. Scrapping non-dom status has been promised by Labour, and is one of the party’s only major money earners. Money from this has been committed to measures including NHS improvements, so adopting the policy could lay a trap for Sir Keir Starmer, who would have to find an alternative way to pay for these pledges.

The government is also reportedly looking at extending the windfall tax on excess oil and gas profits, another policy which Labour has pushed.

Jeremy Hunt has been speaking ahead of the Budget. He said: “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."

I presume he is referring to inflation halving, because the PM's other two priorities were to grow the economy and cut national debt both of which are not happening.

He said: “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.”

Just a reminder that under this government, with certain mitigating factors like Covid and the Ukraine war energy crisis, the tax burden is at its highest level since the Second World War.

He added that growth “cannot come from unlimited migration”, but “can only come by building a high-wage, high-skill economy”. Hunt repeated the Tory attack line that Labour would take the country backwards, saying: “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.”

Jeremy Hunt has just left Downing Street and is on his way to Parliament. He was pictured outside No10 with the famous red box.

The Chancellor is expected to announce a tax on vaping products in the Budget today. This would charged to manufacturers and importers of the liquid in vapes, which are currently only subject to VAT. Similar to tobacco products, the measures would essentially make vapes more expensive to buy.

Unsurprisingly vaping companies are against this, claiming it could stop people from quitting smoking. Dan Marchant, founding member of the UK Vaping Industry Association, said: "The government needs to be extremely careful that they do not shoot their own Smokefree 2030 plans in the foot, and any taxation needs to be considered very carefully.

"Outside of the harm reduction benefits, the next biggest motivational factor for smokers switching to vaping is the very significant financial savings. The Treasury needs to be extremely cautious not to take this away and actually discourage smokers from switching, making the goal of a smoke-free generation unattainable.

"Ireland was going to place a tax on vaping products, but the idea was dropped in December over ‘concerns it would discourage smokers from quitting." Remember Rishi Sunak wants to ban cigarettes from the younger general permanently.

The Resolution Foundation has said that the predicted two percentage point cut to National Insurance will benefit those on £50,000-a-year the most, with a net gain of £1,200. However, if you earn less than £19,000 you will be worse off due tax thresholds likely being frozen.

Whether to unfreeze income tax brackets is another big question for Jeremy Hunt in the Budget today. Over the last year, Hunt has frozen income tax bands, which has led to the overall tax burden (the amount of tax people are paying compared to GDP) at its highest level since the Second World War.

The reason for this is that over the last few years, inflation has skyrocketed and that has pushed wages up (albeit at a lower rate). That has then pushed people into higher tax bands - for example from the tax-free allowance into the 20% rate, and from there into the higher and top rates. This means that merely by freezing income tax thresholds, the Treasury is raking in a lot more tax than the year before.

Hunt is under pressure from Tory backbenchers to reduce these tax bands. It’s not a great look for the Conservatives to be seen as the party of high tax. And it means that those on the lowest salaries will end up paying more tax, despite the National Insurance cut, as they get pulled into higher brackets.

A conundrum for Jeremy Hunt is what to do with fuel duty. It is expected he will maintain the current 5p cut, which will cost around £5bn-a-year. Hunt has been under huge pressure from backbench Tories, who have been teaming up with rival party Reform UK, to maintain this.

Last month, firebrand Tory backbencher Jonathan Gullis presented a petition of more than 120,000 signatories to No10 Downing Street, urging the government not to increase fuel duty.

Reform UK London mayoral candidate Howard Cox, founder of campaign group FairFuelUK, told NationalWorld: “The Budget is actually a pivotal moment leading up to the general election, it’s crucial to what voters are going to do. They’ve got to really make a difference in people’s cost of living, I’ve written a private letter to Jeremy Hunt, Jonathan [Gullis] has seen that, challenging him to cut fuel duty by 20p per litre.”

Cox organised for 40 MPs, including Suella Braverman, Jacob Rees-Mogg and Priti Patel, to sign a letter to Hunt urging him not to increase fuel duty. In both cases, Tories are working alongside Reform UK as part of the FairFuel campaign.

The other issue for Hunt is that the Office for Budget Responsibility has included scrapping the freeze as part of their calculations that debt will come down (very slightly) after five years, which is one of the government's fiscal rules. So if the Chancellor keeps fuel duty as is he will have to money from somewhere else.

A reminder that PMQs will come at noon ahead of the Budget at around 12.30pm. You can watch both on the video player on this live blog.

This was a sombre PMQs ahead of the Budget, writes Ralph Blackburn from the House of Commons press gallery. Sir Keir Starmer asked his first three questions on the Sarah Everard murder, and how her killer Wayne Couzens was able to continue as a police officer despite committing an array of serial offences.

Both the Labour leader's questions and Rishi Sunak's answers were carried out in almost silence. Starmer asked why the government had not brought in mandatory vetting standards for police forces across the country.

The loudest the subdued Commons got was when Starmer referenced his time as the director of public prosecutions, eliciting groans from the Tory benches.

Sunak failed to answer, when questioned, why MPs accused of sexual offences would not be banned from the Parliamentary estate. Starmer's tactics were clear, trying to paint himself as a serious Prime Minister in waiting, bringing up his experience as DPP as much as possible. Sunak was keen to point to action taken around rape offences and police vetting - will this translate to votes?

Chancellor Jeremy Hunt has taken to the box inside the House of Commons to begin his budget statement.

There has already been warnings for interruptions from opposition MPs in the chamber, with Deputy Speaker of the House Eleanor Laing issuing a stern words to those jeering the Chancellor.

Political Editor Ralph Blackburn, who is at Westminster for the announcement, pointed out an anecdote from the opening moments of the speech.