It's an autumn General Election, signals Jeremy Hunt with 'big divide' between Tories and Labour on taxes

Jeremy Hunt put Britain on notice for an autumn General Election as he sought to create a “big divide” between the Tories and Labour on taxes.

The Chancellor sought to argue that the Conservatives would continue to cut taxes, if they are re-elected, and that Labour would not do so.

Rishi Sunak had already signalled that the “working assumption” was for the election to take place in the second half of 2024.

But Mr Hunt narrowed this down to a few months, suggesting it would not be in late summer or early winter.

Asked the day after the Budget whether he was planning another fiscal event before the election, Mr Hunt told Times Radio: “No, but if there’s an autumn election which is the working assumption then theoretically it would be possible to have one.”

Leading political experts believe November 14 is the most likely election date, with Mr Sunak possibly announcing it at the end of the Conservative autumn conference in early October.

Asked by Jeremy Vine on BBC Radio 2 whether there would be an election in May, the Prime Minister laughed and said: “I’m not going to say anything extra about that.

“What I would say is what matters is the choice at that election, and the choice, especially after this Budget, is clear. Our plans are working.

“Of course there’s more work to do, we are starting to deliver the change that people want to see and if we stick with that plan people can have the peace of mind that there is a brighter future for them and their families.”

The Chancellor left the door open for more pre-election giveaways after delivering another 2p cut in national insurance in the Budget, having done the same in the Autumn Statement.

Delivering his Budget statement, Mr Hunt stressed: “When combined with the autumn reductions, it means 27 million employees will get an average tax cut of £900 a year and 2 million self-employed will get a tax cut averaging £650.”

But the UK is still on course to have an overall tax burden rising to the highest since 1948, according to the Office for Budget Responsibility.

Thursday’s Evening Standard Front Page (Evening Standard)
Thursday’s Evening Standard Front Page (Evening Standard)

Almost seven million people will either be dragged into income tax for the first time or shifted into higher bands by 2028/29 as a result of the decision not to raise thresholds including for income tax and national insurance in line with inflation.

The OBR said this results in an extra £41.1 billion for Treasury coffers, which is only partly offset by the £21.4 billion cost of the successive 2p national insurance cuts announced in the Budget and November’s autumn statement.

Asked about a climbing tax burden, the Chancellor told Times Radio: “Well, I’m not happy that taxes have had to go up, but yes, you’re absolutely right.

“We have had to put taxes up because we had a once-in-a-century pandemic, an energy crisis that was similar to what we had back in the 1970s - very exceptional events.

“And we’ve had to be responsible with the country’s finances and put up the taxes to pay for the help that we gave to families and businesses up and down the country, which I think was the right thing to do.”

“But having been through those, the big divide in British politics is do we want to stick with those higher levels of tax or do we want to start to bring them down when we responsibly can and what we’ve shown the country is Conservatives have a plan to bring down taxes.”

He signalled that he wants to further cut national insurance, and Mr Sunak said abolishing it remained a “long-term ambition”.

“We have this unfairness at the moment where if you’re working, you pay tax twice, once in income tax and then again in national insurance,” the PM told broadcasters.

“That’s unnecessarily complicated because all of that money ultimately goes into the same pot, funds the same public services. But ultimately, as I said, it’s unfair because you are paying tax not once but twice.

“But my ultimate ambition is to remove that unfairness entirely, and if we stick to our plan, not just will we deliver the £900 of tax cuts this year, we can really make progress towards that long-term ambition over time in the next Parliament.”

But Labour demanded the Government explain how it would fill a “£46 billion black hole” if it does scrap national insurance entirely.

Sir Keir Starmer said the Budget was the “last desperate act of a party that has failed”, and leading economic experts warned of the tight squeeze on unprotected public services under the Government’s current spending plans.

The Labour leader said: “Britain in recession, the national credit card maxed out, and, despite the measures today, the highest tax burden for 70 years.

“The first Parliament since records began to see living standards fall, confirmed by this Budget.”

Paul Johnson, director of the Institute for Fiscal Studies think tank, said: “Come the election, tax revenues will be 3.9 per cent of national income, or around £100 billion, higher than at the time of the last election. This remains a parliament of record tax rises.

“While the OBR got a little more positive in its projections, the picture on living standards also remains dismal. On average, households will be worse off at the time of the next election than they were at the last, following nugatory real earnings growth.”

With Labour 27 points ahead in the latest Ipsos poll for The Standard, with the Tories on a record low of just 20 per cent and Labour on 47 per cent, Sir Keir is coming under growing pressure to lay out his plans for Government.

Labour, though, may be reluctant to say much more until closer to the election given that the Chancellor adopted its plans to target the non-dom system to raise funds, as well as extending the windfall tax on oil and gas companies making bumper profits.

The moves left a blackhole in shadow Chancellor Rachel Reeves plans to inject more money in the NHS and education.

Mr Hunt said inflation is set to fall to below the Bank of England’s two per cent target “in a few months’ time”, easing the cost-of-living squeeze.

But he also set out a series of measures aimed at offering “much-needed help in challenging times”, including:

- Changing the way child benefit is treated, with the individual earnings threshold at which it is taxed increasing from £50,000 to £60,000 from April, with people getting at least some help until they earn £80,000.

- Freezing fuel duty and extending the “temporary” 5p cut for a further 12 months.

- A freeze in alcohol duty to February 1 2025.

- Extending the Household Support Fund with an extra £500 million.

- Guaranteeing funding rates to early years providers for the next two years to deliver its “landmark” childcare expansion offer.

The OBR forecast that GDP is set to grow more than previously expected, albeit still at relatively modest levels.

The OBR forecast growth of 0.8 per cent in 2024, up from the 0.7 per cent forecast in November, and 1.9 per cent next year - up from 1.4 per cent on the autumn forecast.