07 March 2024 , 08:55
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Jeremy Hunt has quickly backtracked on his vow to scrap National Insurance altogether after he was accused of acting like Liz Truss.
The Chancellor suggested he wanted to get rid of the levy after he announced he was cutting it by 2p in the Budget. In an email to Conservative Party supporters on Wednesday evening he said he would "make progress towards that goal" within five years.
But critics accused him of acting like the ex-PM by floating massive unfunded tax cuts. Labour said the £46billion-a-year cost would be even bigger than the cuts announced in Ms Truss's disastrous mini-Budget that crashed the economy. The respected Institute for Fiscal Studies (IFS) said the plans were "not worth the paper its written on" unless the Tories explain how they plan to pay for it.
"Talk of abolishing national insurance does not look realistic," IFS director Paul Johnson said. "Let's be clear, he is not talking about abolishing national insurance, he is talking about that relatively small part paid by employees. But this pledge to cut taxes by more than £40 billion goes in the same bucket as pledges to increase defence spending - not worth the paper its written on unless accompanied by some sense of how it will be afforded."
Mr Hunt appeared to roll back this morning, telling Times Radio that removing National Insurance is unlikely "any time soon", as he admitted it would be a "huge job". He said: "It raises an enormous amount of money. And I don't think it's realistic to say that's going to happen any time soon. But I do want to end the unfairness of a system where the income you get from work is taxed twice through income tax and National Insurance."
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Mr Hunt faced calls to explain where the money would come from if he brought in the drastic measure. Labour's Rachel Reeves said: "Government ministers yesterday toured the radio and television studios to say that this is something they want to do in the next parliament. Well, where is that £46 billion going to come from?
"Because that is a bigger unfunded tax cut than what even Liz Truss and Kwasi Kwarteng floated when they did their mini-budget a year and a half ago."
The Shadow Chancellor continued: "If he wants to cut taxes, he needs to say where the money's going to come from. I was very worried yesterday when he starts floating ideas of £46 billion of tax cuts without even saying where the money's going to come from."
Jonathan Ashworth, Labour’s Shadow Paymaster General, said: “Jeremy Hunt’s promises of £46billion of unfunded tax cuts would leave a gaping black hole in the public finances. This exposes the clear risk of five more years of the Conservatives - they will gamble with the public finances and working people will be be forced to pay the price.
And he added: “This Tory government clearly hasn't learned anything since Liz Truss crashed the economy and sent people’s mortgages spiralling. Labour will never play fast and loose with the nation’s finances. It’s time for change. It’s time for a general election.”
Mr Hunt's Budget has opened up a £19billion black hole in public service funding, overnight analysis by the Resolution Foundation found. Ministers insist they are still planning for a general election in the autumn - meaning there could still be another Budget or mini-Budget before it happens.
Asked when the election would take place, Mr Hunt said: "That's the six million dollar question isn't it....I pride myself on answering questions that I know the answer to, but I don't know the answer to that one because I don't know when the election is going to be. If there's a autumn election, which is the working assumption, then theoretically it would be possible to have one. But that's a decision that's above my pay grade."