I will be headed to the BBC's Broadcasting House in London during the course of this morning. As has been the case for well over a decade now, I will be listening to the budget whilst there (and tweeting about it almost continually, for those who use that platform) before going on air at about 1:30 pm to discuss what Jeremy Hunt has had to say with Jeremy Vine.
There will be one change to the regular format of this Radio 2 programme on this occasion. Mark Littlewood, formally the director of the Institute of Economic Affairs, and the architect of much of Liz Truss's economics, is no longer my sparring partner. The unfortunate news is that the BBC are replacing him with Julian Jessup, formally of the Institute of Economic Affairs. I suspect that I will treat any nonsense that he has to say with the same disdain that I showed to Mark over the years that we commented together.
If reports are to be believed, and the Treasury appears to have become ever more leaky in this respect over the years, two of the biggest announcements that might be made in this budget are already known.
The first is that fuel duties are to be frozen, yet again, at a cost of more than £5 billion a year. Given that this has been frozen for so long, no one should be particularly surprised about this, but the implications are large. The only way in which the Office for Budget Responsibility could make last November's forecasts for the next five years meet the requirements of Jeremy Hunt's so-called fiscal rule was by assuming that this charge would be reinstated. If that is not to be the case, then how he will supposedly balance his books, using that false criteria of appraisal with which he is much enamoured, is not known. Unfortunately, I see none of the detailed figures before going on air, so I doubt that I will be able to provide elucidation during that commentary.
The second decision that he is being reported as having made is that national insurance is to be cut again. 2% was cut off the employee's rate last November. It is claimed the another 2% will be cut off this rate in the Budget to be announced today. Clearly we do not know if this is true as yet, but if it is then the cost will be between £9 billion and £10 billion per year, with a supposed average saving of a little over £400 a year for the mythical average earner.
Presuming that this leak is based on well informed Treasury sources, then this move makes almost no sense.
Politically the Conservatives got no discernible political gain from the last cut that they announced, even though they rushed through legislation so that the impact was seen in pay from January 2024 onwards. As a result, it is very obvious that this cut answered no question that any reasonable person might have asked about the government's intentions with regard to the supply of sound economic policy, and nor will another one.
This is unsurprising. At least three quarters of people in the UK would rather have any government action in this Budget focused upon improvements in the supply of government services, from the NHS onwards. No one is going to thank Jeremy Hunt, Rishi Sunak, or any other Tory MP, for getting this judgement wrong, again.
Then there is one other issue to consider, which is that this policy change fails to have any impact at all on the one group in society where the Tories are hoping to retain support, which is amongst pensioners. Many pensioners are now being forced to work because of increasing pensioner poverty, but since no one over the age of 66 pays national insurance, this will have precisely no impact on their well-being. As targeted measures go, this one completely fails.
There will, of course, be some other announcement that Jeremy Hunt will make to provide a headline if these two have been so heavily trailed, but however looked at these measures, that promote pollution in one case and deny the public the services that they need in the other case whilst collectively failing to deliver for the Tory voter base, really are disastrous. If these are the best that Jeremy Hunt can come up with, I think we can already fairly suggest that this Budget will not deliver for him or his party any of the gains that they so desperately seek. Jeremy Hunt might have been better advised to spend the £100,000 of his own money that he has invested in his own re-election campaign elsewhere in that case.
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Cutting taxes is clearly wrong and a huge “mis-reading of the room” – even the die-hard Tories I know are furious with the state of public services.
However, IF a cut in personal tax is required (for political reasons) better that it comes through NI rates than Income tax rates.
Clive
Please could you explain why it is better to cut NI rather than income tax rates. Cutting NI rates has no effect on those worst off in society, including, for example, those working 2,3 or even 4 jobs, all of which pay less than £12570 per year. It has no effect on pensioners, those working or not working, it gives a better return to those on high earnings than to those on low earnings. Why is that better than, for example, increasing the basic tax free alowance by 10%. That pulls some of the lowest paid out of taxation and gives the same financial benefit to all of those currently paying income tax.
I agree cutting taxes at all is wrong at this time, but this proposal is plain stupid.
I’m wondering if it decreases eligibility for state pensions, defined as a contributory benefit now. So, appear to give with one hand, in reality take with the other.
When the BBC reported on it last night and uttered the words ‘What does this mean for the country’ my wife spilt her tea laughing at my response ‘We’re F***d’
Spot on
Given that there has been no investment in public transport- indeed rail fares are being increased, bus services reduced ie there is almost no option but to take the car, then increasing fuel tax would surely be inflationary as it feeds through to everything. It might be the straw that breaks the camels back since petrol prices are already back on the rise due to wars in Gaza and Ukraine. I would love to have a coherent transport strategy with serious money invested in bike lanes and buses, but until we provide alternative options to the car then increasing fuel duty is unfair.
This tells you everything you need to know about fiscal rules:
“The UK has the shortest lifespan of fiscal rules out of 35 countries”
in “What are the UK’s ‘fiscal rules’ and why is the OBR under attack?”, The Guardian, Tue 5 Mar 2024
https://www.theguardian.com/uk-news/2024/mar/05/uks-fiscal-rules-obr-treasury-budget-jremy-hunt
How about stopping the tens of billions of pounds of risk free cash being shovelled into the accounts of the big banks and rich pensioners?
…and maybe do something more useful with it instead?
I suspect that this is more about screwing up any incoming government with cuts forcing raising it tax later.
I would believe it – it’s a scorched earth policy.
Tory’s look like they’ll lose the next GE. Make their successors sort out the mess that’s left befind. Then in five years (maybe ten) blame it on the successor and then we’re in again for another14 years.
I know – very Machiavellian but…..
Thank you, Leigh.
I think you’re right.
My former manager’s son is back at Tory HQ, working on the campaign. He has various interests, but spends the year or so leading to general elections at HQ. His mother, my former manager and with whom I stay in touch, was a junior Treasury minister under Major.
A school of thought at HQ thinks it’s better to prioritise the blue wall, one reason for Cameron’s return, and try to retain 150 plus seats, 180 – 200 would be a bonus, to enable bouncing back after a term or two. The same school thinks Starmer will govern as he’s campaigning, not changing anything, so buyer’s remorse will kick in.
Tory intel reports that the Labour leadership thinks a candidate from the right will emerge to lead the Tories, allowing Labour to move further right and do even less. By the next general election or soon after, HQ expects a fresher and more centrist face, a la Cameron* in 2005, to emerge and challenge a Labour government adrift.
The likes of Rupert Harrison*, Osborne’s man and standing in Bicester and Woodstock, and Nick Timothy, Theresa May’s man and standing in west Suffolk / Newmarket, are expected to be leadership contenders once Badenoch, Braverman and Mordaunt have frightened voters.
*Both Etonians, so one may see two varieties of Conservatism, Cameron and May, fight. Osborne is prepping his man.
The above was from last year.
I will quibble only to suggest Osborne in reality was always Harrison’s man. I doubt Osborne could tie his shoelaces without instruction.
I think you and Steve Ford are correct. The appalling Tories know they’ve made such a mess that even their own voters are turning on them, so they are spitefully setting up a very bad situation for the next government who’ll then get accused by these wretches and their client journalists in the propaganda outlets masquerading as newspapers as being tax raisers.
That’s the level these turds operate at.
Amusingly, I see Mr cockney rhyming slang’s constituency office was daubed with graffiti overnight saying ‘die Tory scum’. Sounds good to me.
Listen to Richards appearance here on
Jeremy Vines show “Spring budget and shutters”
https://www.bbc.co.uk/sounds/play/m001wqr7
Beginning at 1:45:55
oops. beginning 1:41:55
Tax cuts that the Country cannot afford. It was not very long ago that the Government was proposing to increase NI contributions to pay for the NHS. The NHS and public services are all failing, but now they can cut NI by 4%.
Pensioners will see their tax increase due to frozen allowances and will not benefit from the NI cut. Why punish your core voters ?
The ONS stats for the England & Wales fertility rate was 1.49 (2022). In Scotland it is 1.3. The replacement rate is 2.1. We are on an extinction trend. This is why Britain needs immigration, badly; and Nature hates a vacuum. Falling fertility rates are a function of the level of economic development. This applies throughout the world. It hit China, that had draconian laws to restrict the birthrate in a fast growing population in the later twentieth century. China has an advance economy, and a collapsing fertility rate. This economic fertility law is universal.
So what is British government tax policy on larger families? Basically, it seems to be to encourage work, discourage larger families; encourage all adults to work, discouraging family life (there has even been a policy adverse to child allowance for more than two children). They want people in work, to the point a single person working finds it difficult to earn enough to fund a family at all. Two people working may mean paying someone to look after the children; and Government fails to fund the resources to provide the child minders. We are thus building a flawed system intent on taking in each other’s washing.
I am no expert on the tax structure supporting families and family life; but it seems to me that if we want to redress the collapse in the fertility rate, we need to arrange matters very differently. Perhaps we don’t; but I have no idea what we are trying to do.