MPs laugh as Sunak is asked what part of his economic legacy he is most proud of
Jeremy Hunt has delivered a further cut in national insurance in today’s Budget statement.
Mr Hunt announced a two percentage point cut to national insurance among a series of measures in the spring Budget, in a repeat of his autumn statement.
In his hour-long speech, which began with interruption from opposition MPs, he announced a freeze on alcohol duty will be extended until February 2025, and a 5p cut to fuel duty is to continue for another 12 months.
He has also promised to deliver the government’s free childcare expansion pledge, starting on 1 April, with guaranteed rates paid to childcare providers.
And he abolished the tax status of so-called “non-doms” used by wealthy overseas individuals.
Two years ago,The Independent revealed that Rishi Sunak’s wife Akshata Murty dodged millions in UK tax by taking advantage of the loophole.
Mr Hunt will hope the perks delivered will attract voters for the next general election with the Tories’ popularity currently languishing at a 45-year low.
Labour welcomed the cut to national insurance, but claimed Rishi Sunak had broken a promise to cut income tax.
Sir Keir Starmer said: “Having briefed that all week, that an income tax cut was coming, that promise is in tatters today.”
Economic benefits of Hunt’s Budget ‘almost fully offset’ by decreasing labour force, says OBR
The economic benefits of Jeremy Hunt’s Budget are “almost fully offset” by changes to the labour market and productivity, the OBR has said.
Levels of economic inactivity among the UK population are higher than assumed, said chair Richard Hughes, with long-term illness both the most common and fastest growing reason for being outside the labour force.
“This means that the level of real GDP at the start of this year is slightly lower than we anticipated in November. But our forecast for economic growth thereafter is largely unchanged,” he said.
“This is because the positive effect on GDP of a larger population, lower energy prices, lower interest rates and a small boost from measures in the chancellor’s spring Budget is almost fully offset by the negative effects of lower labour participation, average hours and productivity.”
He added that the overall level of GDP is just 0.1 per cent higher than forecast in November, but GDP per person will be a full percentage point lower in 2029 than anticipated in November.
Starmer welcomes Hunt’s plans to improve NHS IT and fuel duty freeze
Sir Keir Starmer welcomed the Chancellor’s plans to improve NHS IT, and the fuel duty freeze, which he said Labour would support.
The Labour leader gave his backing to extra NHS IT funding, adding: “Although, I have to note that the Chancellor, when he was health secretary 10 years ago, promised to make the NHS paperless by 2018.”
He went on: “I know the Prime Minister’s fondness for Elon Musk extends to an enthusiastic embrace of his community notes on fact checking, so I will say this bit slowly, Labour supports the fuel duty freeze, that is our policy, and I look forward to the Prime Minister’s acknowledgement of that in coming days.”
Sir Keir urged Jeremy Hunt to ensure the saving was passed on to “hard-pressed families at the pump”.
The Chancellor confirmed in his Budget that the 5p per litre cut implemented in March 2022 will be retained for another 12 months, and fuel duty will not increase in line with inflation.
Middle East conflict escalation could see inflation spike to 7%, says OBR chair
An escalation in the conflict in the Middle East could see inflation spike back to 7 per cent, the OBR has warned.
“Less than three months has passed since our last forecast and the period between has been relatively uneventful economically, at least by the tumultuous standards of the early 2020s,” said chair Richard Hughes.
Inflation has come down more quickly than expected and is now expected to fall below the 2 per cent target by the second half of this year.
While their forecasts are positive on inflation, conflict spilling over to other parts of the Middle East and interrupting oil and gas exports, could see quarterly inflation spike back up to 7 per cent and real GDP contract by around 1 per cent.
OBR holding press conference on post-Budget forecasts
The Office for Budget Responsibility is now holding a press conference on its forecasts published in the wake of Jeremy Hunt’s Budget.
Tory MPs should expect government to remove private school tax relief, jokes Starmer
Tory MPs should expect to soon defend the government on plans to remove private school tax relief following the chancellor’s decision to axe the non-dom status, Sir Keir Starmer said.
Welcoming the move, which is a Labour policy, Labour leader Sir Keir said: “For those opposite now a little downbeat about another intellectual triumph for social democracy, I say get used to it, because with this pair in charge it won’t be long before they ask you to defend the removal of private school tax relief as well.
“The harder they try with cynical games like this, the worse it will get for them, because the whole country can see exactly who they are.
“Fighting for themselves, politics not governing, party first, country second.”
Hunt has chosen inaction on homelessness, warns Shelter
Jeremy Hunt has “chosen inaction” on homelessness in a move which is harming the economy, the charity Shelter has said.
“Homelessness is a political choice,” said chief executive Dame Polly Neate. “In the final Budget before a general election, with the housing emergency spiralling out of control, the chancellor has chosen inaction.
“By ignoring the vast number of people losing their homes, he is harming both the economy and people whose lives are being wrecked by homelessness.
“The Chancellor is right that investment is the best way to improve productivity. Had he invested in building 90,000 social homes a year he could end homelessness, save the taxpayer money, boost jobs, reduce the burden of poor housing on our NHS and improve children’s life chances.
“If this government or the next is serious about wanting the economy to grow and people to thrive, investing in genuinely affordable housing is a no brainer. Building 90,000 social homes would pay for themselves and return an impressive £37.8bn back to the economy in just three years.”
Starmer jokes that Hunt ‘taking lessons from the Willy Wonka Experience’
Keir Starmer jibed that Jeremy Hunt has been “taking lessons in marketing from the Willy Wonka Experience in Glasgow.”
The Labour leader said not “all is not as it seems” because “up and down the country” parents are still unsure if they will receive their childcare entitlement.
Former Tory donor Rocco Forte says Hunt’s refusal to scrap ‘tourist tax’ is a ‘spectacular own goal’
Sir Rocco Forte, chair of Rocco Forte Hotels, said it is “staggering” that Rishi Sunak and Jeremy Hunt refused to scrap the so-called “tourist tax” on overseas shoppers, despite a campaign by over 500 leading businesses calling for them to do so.
Tourists from overseas were allowed to reclaim the 20 per cent VAT on their purchases in the UK until January 2021, and business chiefs have called for the perk to return to the retail and hospitality industries.
Sir Rocco said: “The case for reintroducing tax-free shopping in the UK is clear and overwhelming. As things stand, every country in the EU offers sales tax rebates to tourists while we don’t, meaning the whole tourist economy in the UK is operating with one hand tied behind its back.
“Independent economic analysis shows that scrapping the tourist tax would more than pay for itself because of the tourist spending that would be stimulated in hotels, restaurants, tourist attractions, taxis and the like, with an £11 billion boost to GDP.
“Restoring tax-free shopping would also represent a major Brexit opportunity as the UK would be able to offer savings to a new market of 500 million EU consumers, thanks to our place outside the EU.
“This is a spectacular own goal for UK plc. We will now need to persuade Labour as the likely incoming government that reform is a prerequisite for stronger economic growth.”
Starmer warns that ‘this is what decline looks like’
Sir Keir Starmer has hit out at the “utterly discredited idea that economic growth is something the few gift to the many”.
“This is what decline looks like and the complacency they’ve shown today, it takes your breath away. Britain deserves better than this,” the Labour leader said.
“Britain deserves a real plan for growth, an end to 14 years of stagnation, wealth creation across the whole of the country, higher living standards for working people. This is the mission we need.
“But yet again what we got was the same tired old formula, the sticking plasters, the chopping and changing, the party-first country-second politics with no repudiation of the utterly discredited idea that economic growth is something the few gift to the many.”
Lib Dems attack Budget as ‘desperate last throw of the dice’
The Lib Dems have hit out at Jeremy Hunt’s “bottom-of-the-barrel Budget”.
“This is a bottom-of-the-barrel Budget from a Conservative government that has given up on governing,” said Sir Ed Davey.
“Rishi’s recession is being followed by Hunt’s hangover, with years of unfair tax hikes while local health services are stretched to breaking point. This Budget had nothing to offer for people seeing their mortgage soar due to Conservative chaos or being left waiting for months in pain for NHS treatment.
He added: “The public will see this for what is: a desperate last throw of the dice by a Conservative government that has neglected the NHS, trashed the economy and overseen a record fall in living standards.
“It couldn’t be clearer that we need a general election now so voters can finally kick this tired and out-of-touch government out of office.”
