Hunt Rolls The Dice
Jeremy Hunt will roll the dice for probably the last time later today in the hope that his Conservative party can claw back some of its voters with a pre-election giveaway. According to those in the know, the Chancellor of the Exchequer will use today's budget to cut another 2% off national insurance, a tax in all but name. Whilst some in his party have pushed for a more expensive cut in income tax, the Prime Minister being one, senior Tories have signalled that Sunak plans to fight the general election on the promise of future income tax breaks.
According to an Ipsos poll released on Monday, Sunak and Hunt need all the help they can get. The poll put the Conservatives on just 20%, an all-time low, with Labour on 47%. However, Hunt's ambitions are being checked by tight public finances. The government's fiscal watchdog, the Office for Budget Responsibility, said Hunt has just GBP13bn to work with before violating his own rule to decrease national debt within five years. Thus, Hunt is also believed to be contemplating various revenue-enhancing strategies, including terminating the UK's non-domiciled tax status, tightening public expenditure, and prolonging a windfall tax on oil and gas corporations. Gemma Tetlow, chief economist at the Institute for Government think tank, said: "Hunt wants to do something that appeals to voters, but faces the reality of fiscal and economic forecasts that suggest there is very little room for manoeuvre. There’s not an easy win or easy giveaways to reach for." The proposed national insurance cut is predicted to offer a £900 advantage to the average worker when coupled with the identical reduction announced in Hunt's previous fiscal statement in November.
However, there are rumours that there could be another fiscal event later this year if falling inflation and interest rate cuts create more fiscal headroom for the Chancellor, or alternatively, it could form the key plank of the Conservative election manifesto.
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