Jeremy Hunt will only cut more taxes if 'affordable and responsible' despite Tory hopes of pre-election boost
6 January 2024, 8:20
Jeremy Hunt has said he is unsure if more tax cuts are on their way in the spring budget, as he hailed the cut to National Insurance which kicks in today.
The Chancellor told LBC he would only make further cuts in March if it was "affordable and responsible" - despite Conservatives hoping that reductions would allow the party to close the gap on Labour ahead of the general election.
He told Paul Brand "we can't get back to pre-Covid levels of tax in one go" but said his two percentage point cut to National Insurance should make a "big difference to family budgets when people have been feeling a lot of pressure".
Mr Hunt said: "In the budget coming up on March 6, just as in the Autumn Statement, I will be focusing on the growth of the economy.
"I can’t tell you at this stage whether there'll be room for any tax cuts, as much as I'd love to introduce those if they're affordable and responsible.
Read more: Boost for 27 million Brits’ wallets as Chancellor's National Insurance cut comes into force
"But we will be doing things that make sure we grow the economy.
"If we want more money for the NHS, and our public services, growth is essential."
His words will not comfort Conservatives who believe tax cutting could give the party the chance to mount a better challenge to Labour.
Rishi Sunak has not quite fired the starting gun on a general election, but has now revealed he expects to call a poll in the second half of 2024.
That will allow time for inflation to ease further and for workers to see more money come in through Mr Hunt's National Insurance cut.
Under the policy, contributions have been slashed by two percentage points, from 12% to 10%.
The average salaried worker on £35,400 will save £450 a year and households with two average earners will save nearly £1,000.
Earlier, he praised the cut, as he said the economy has "turned a corner".
"With inflation halved, we've turned a corner and are cutting taxes – starting with today's record cut to National Insurance worth nearly £1,000 for a household," he said.
"From nurses and brickies, to cleaners and butchers, 27 million hard-working Brits will have a little more cash in their pockets."
Under the slashed rates, an average full-time nurse will save £520 annually while an an average junior doctor will save £750 and a teacher £630.
Mr Sunak said: "We have made tough decisions on the economy, supporting people through global shocks such as the pandemic and Putin’s illegal invasion of Ukraine. It is because of the tough decisions this government has taken that today we are able to cut taxes for 27 million people across the UK.
"Today's tax cuts will directly reward hard working people, putting £450 back in the pocket of the average worker and helping them make ends meet."
But the cut to national insurance comes as the Government has frozen the income tax threshold, providing a de facto tax rise to millions.
The Institute for Fiscal Studies has said the Autumn Statement gave back just £1 in tax cuts for every £4 of tax rises due to threshold freezes since 2021.
Labour has criticised the cut, labelling it a "raw deal".
The party said that frozen income tax and national insurance thresholds means families have been drawn into higher tax bands, meaning they are no better off under the cut.
Shadow chancellor Rachel Reeves said: "Under Rishi Sunak's raw deal, for every extra £10 people are paying in tax they are only getting £2 back."
Mr Hunt also said in his Autumn Statement that he is scrapping Class 2 National Insurance, paid by many self-employed workers, from April which would save the average self-employed person £192 per year.
It comes after inflation dropped dramatically to the lowest rate in two years in November - falling from 4.6% to 3.9%.