Chancellor Jeremy Hunt has cut national insurance for 27 million workers by 2 percent as he outlined an Autumn Statement that set out battle lines with the Labour Party in the run up to next year’s general election.
Mr. Hunt told a packed House of Commons on Wednesday the economy was “back on track” and said his Autumn Statement contained “110 different measures to help grow the British economy.”
He announced plans to cut national insurance contributions by two pence in the pound, which will cost the Treasury about £10 billion annually.
Mr. Hunt said he would cut the main rate of national insurance for workers from 12 percent to 10 percent and he said he would introduce emergency legislation so it came into force in January, rather than waiting for the new financial year in April.
Urgent Legislation to Push Through National Insurance Cut
In a surprise announcement—which immediately triggered speculation the government is planning to go for a general election in the spring—Mr. Hunt told MPs he would bring forward urgent legislation to introduce the cut in national insurance contributions from Jan. 6, “so that people can see the benefit in their payslips at the start of the New Year.”Mr. Hunt said: “It means someone on the average salary of £35,000 will save over £450. For the average nurse, it is a saving of over £520, and for the typical police officer it is a saving of over £630 every single year.”
Ben Zaranko, an economist at the Institute for Fiscal Studies, wrote on X, formerly known as Twitter: “There are many reasons why the chancellor might have gone for a cut to national insurance rather than income tax. Here’s one: the cut to NI kicks in January 6th. If he'd gone for income tax, it wouldn’t have kicked in until April. To me, that points to a spring election.”
The chancellor also unveiled measures to help self-employed workers, who he described as the people who “kept our country running during the pandemic.”
He said he was abolishing class 2 national insurance—a flat rate compulsory charge paid by self-employed people earning more than £12,570—which would save the average self-employed person £192 a year.
He also confirmed the triple-lock formula would remain, meaning the state pension will rise by 8.5 percent, a boost of £900 a year for the average pensioner.
But Mr. Hunt also set out tough new tests for thousands of people on disability benefit.
He said: “We will reform the fit note process so that treatment rather than time off work becomes the default. We will reform the work capability assessment to reflect greater flexibility and availability of home working after the pandemic. And we will spend £1.3 billion over the next five years to help nearly 700,000 people with health conditions find jobs.”
‘Biggest Business Tax Cut in Modern History’
Mr. Hunt also confirmed that a temporary tax break that allowed firms to cut their tax bills if they invested in new equipment would be made permanent and he described it as the “biggest business tax cut in modern history.”In a video message released before he appeared in Parliament, Mr. Hunt said he was keen to encourage British entrepreneurs.
Mr. Hunt, who set up an education company 30 years ago, said, “I want to help thousands of other people do what I did, and I hope today will make a really big difference.”
Earlier the government had announced an increase in the national living wage, which will rise from £10.42 to £11.44 from April and will now include those aged over 21, rather than 23.
In a light-hearted moment during his speech, Mr. Hunt had a dig at the Labour Party leader, Sir Keir Starmer, for his previous support for his predecessor Jeremy Corbyn.
He said: “We share something in common—we both wanted to get a Jeremy elected as prime minister. But whereas mine would have grown the economy, his would have crashed the economy.”
‘British People Won’t Be Taken for Fools’
The shadow chancellor, Rachel Reeves, responded by saying, “The British people won’t be taken for fools.”She said the Tories had crashed the economy and she added, “From their failure to uprate income tax or national insurance bands, to forcing councils to raise council tax, the Conservatives have pushed the costs of their failure onto others.”
Ms. Reeves said, “What has been announced today owes more to the cynicism of a party desperate to cling onto power than the real priorities of this high-tax, low-growth Conservative government.”
She added: “So I think we can forgive taxpayers for not celebrating when they see the truth behind today’s announcements. Going into this statement the government had already put in place tax increases worth the equivalent of a 10p increase in national insurance.”
“So today’s 2p cut will not remotely compensate for the tax [increases] already put in place by this Conservative government. The fact is that taxes will be higher at the next election than they were at the last,” Ms. Reeves added.
