UK Autumn Statement: Jeremy Hunt cuts tax in bid to cheer gloomy Tories

LONDON — Britain’s Chancellor Jeremy Hunt offered voters a tax cut — with one eye on a general election.

The U.K.’s top finance minister — whose boss Rishi Sunak is trying to defy dire polling for his governing Conservative Party ahead of an expected election next year — announced a two percentage point cut to the main rate of National Insurance as the final flourish in an “Autumn Statement for growth” unveiled Wednesday.

Hunt’s Treasury is betting the personal tax cut — coupled with a boost to the national living wage — will be felt widely, in a move the Conservatives hope will boost the pay packets of ordinary workers and ease voter concerns about the cost of living.

He said: “If we want people to get up early in the morning, if we want them to work nights, if we want an economy where people go the extra mile and work hard, then we need to recognize that their hard work benefits us all.”

National Insurance is paid by all employees earning more than £242 per week, as well as self-employed people making over £12,570 a year. Under Hunt’s plan, the main rate for employees will fall from 12 percent to 10 percent. The cut will kick in in January, rather than April, thanks to “emergency” legislation.

Hunt unveiled his plan in the House of Commons against a mixed economic backdrop. Watchdog the Office for Budget Responsibility has revised down its growth forecasts for 2024, 2025, and 2026 — even as it offered an improved outlook for this year and for 2027.

“If we want those numbers to be higher, we need higher productivity,” Hunt argued, as he talked up a major business tax relief known as “full expensing”; vowed fresh support for apprenticeships; and promised to shake up Britain’s restrictive planning rules in a bid to spur growth and investment. “Our plan for the British economy is working, but the work is not done,” the chancellor told MPs.

While the U.K. economy remains heavily indebted, Hunt could point to fresh OBR figures forecasting slightly lower public sector borrowing in each of the next five years than was predicted in the spring.

Hunt’s tax cut could cheer Conservative MPs, nervous at the U.K.’s historically high levels of personal taxation after massive state intervention during the coronavirus pandemic and the energy price shock of Russia’s Ukraine invasion.

“The fact is that taxes will be higher at the next election than they were at the last,” said Labour’s Shadow Chancellor Rachel Reeves as she responded in the Commons. “This is the legacy of the Conservatives.”

This developing story is being updated.