‘We’re sticking to the plan’: Chancellor poised to unveil 2p National Insurance cut saving people a total of £900 a year

6 March 2024, 09:45 | Updated: 6 March 2024, 11:56

The chancellor wants to make national insurance on of the key measures in the spring Budget
The chancellor wants to make national insurance on of the key measures in the spring Budget. Picture: Alamy/HM Treasury

By Asher McShane

Chancellor Jeremy Hunt today said 'we're sticking to the plan' ahead of an expected cut to National Insurance in the Budget that will give the average worker an extra £450 back each year.

Listen to this article

Loading audio...

Mr Hunt said the planned cut would deliver "more opportunity and more prosperity".

He said families “want a society… where if they work hard, they can bring home more money for their family.”

“It is possible if we stick to a plan,” he added.

The Chancellor, who has faced pressure from Tory MPs to ease the record-high tax burden, promised "permanent cuts in taxation" that would bring "higher growth" as he seeks to woo voters ahead of this year's general election.

He looks likely to announce a cut in national insurance by a further two percentage points on Wednesday, matching a cut in the autumn statement.

Budget 2024 LIVE: Jeremy Hunt set to give workers a £450 boost with 2p cut to National Insurance

The National Insurance change could save the average worker £450 a year, adding up to £900 when combined with last year's move.

Mr Hunt's tax cut is widely seen as an attempt to claw back momentum ahead of an election this year - which Labour have said they expect as soon as May.

Labour are expected to argue in response to any national insurance tax cut announcements that 'fiscal drag' - people being caught in frozen tax brackets - as well as increases to council tax would still leave the average household worse off.

Labour leader Sir Keir Starmer said that his party would "grow the economy to put more money in [people's] pocket" if they gained power.

Sir Keir said: "The Conservatives have failed the economy and failed working people.

Read more: 'All the indicators point towards a May election', Wes Streeting says, as he accuses Sunak of 'squatting' in No. 10

Read more: Jeremy Hunt 'to cut National Insurance by 2p' in Budget as tax boost for workers

Jeremy Hunt
Jeremy Hunt. Picture: Alamy

"Families were better off with the last Labour government, and they'll be better off with the next one.

"Labour is the party of economic security, we'll grow our economy to put more money in your pocket."

Sir Ed Davey, the leader of the Liberal Democrats, said any tax cuts would be a "deception".

"We will look at the tax proposals the Conservatives bring in," he said. "But if they do cut taxes people will know it’s a deception, because they’ve raised income tax by freezing the tax allowances, a sort of a hidden tax rise on millions of people."

Labour leader Sir Keir Starmer and shadow chancellor Rachel Reeves prepare ahead of Wednesday's spring Budget
Labour leader Sir Keir Starmer and shadow chancellor Rachel Reeves prepare ahead of Wednesday's spring Budget. Picture: Alamy

He added: “They may try and put on a swindle, but I think people will see through it. This is a tax-raising Conservative Government."

It comes after Labour predicted that the election would be in May.

Speaking to LBC's Andrew Marr on Tuesday evening, Shadow Health Secretary Wes Streeting said: "All of the indicators point towards May. It should be May.

"I think people are fed up with the idea that Rishi Sunak, for his own personal survival and wanting to clock up two years as prime minister, will squat in Downing Street into the autumn when people are crying out for change."

The election has to be held by January 28 next year at the very earliest, but it is likely to be this year. Mr Sunak has previously said he was working on the assumption the election would be in the autumn, but rumours have swirled in recent weeks that it could took place in May - in which case it would have to be called soon.

Nels Abbey says the government's proposed tax cuts ahead of the Spring Budget are 'unjustifiable'

Mr Hunt said "lower tax means higher growth" as he promised "permanent cuts in taxation" for families on the eve of his Budget.

The Chancellor said Prime Minister Rishi Sunak's Government's plans "mean more investment, more jobs, more productive public services and lower taxes", and he accused Labour of having "no plan" and the Liberal Democrats of having "no principles".

Mr Hunt's expected £10 billion tax cut would save 27 million workers an extra £450 a year. The chancellor also cut the rate in November's autumn statement.

King Charles III meets with Chancellor of the Exchequer Jeremy Hunt in the private audience room at Buckingham Palace, London.
King Charles III meets with Chancellor of the Exchequer Jeremy Hunt in the private audience room at Buckingham Palace, London. Picture: Alamy

He will sell the move as a £900 overall tax cut to workers when combined with the two percentage point cut that was announced in November.

The chancellor is poised to make national insurance a key measure in the spring Budget after deciding against cutting income tax.

Cutting income tax is much more expensive than reducing percentage points in employee National Insurance.

Pic Shows Jeremy Hunt Chancellor of the Exchequer in No11 Downing Street
Pic Shows Jeremy Hunt Chancellor of the Exchequer in No11 Downing Street. Picture: Alamy

Read more: Budget 2024: Jeremy Hunt expected to freeze fuel duty again - after dire opinion poll ratings for Tories
Read more:
Budget 2024: When is it and what are the key things you need to know?

A cut of two percentage points in employee National Insurance costs around £10 billion a year, whilst cutting 2p in income tax would cost £3.7 billion more.

This tax break is expected to come in April, according to The Times - which has not been denied by Treasury sources.

The opposition party expects Mr Hunt to take its policy of ending non-dom status, which Labour said it would use to fund most of the spending in government, to partly fund the move.

Chancellor Jeremy Hunt joins Matthew Wright ahead of the Budget

However, the Institute for Fiscal Studies has urged Mr Hunt to "tread carefully", and has warned of scrapping the tax status.

This allows foreign nationals living in Britain to avoid paying tax on overseas earnings and by scrapping the scheme, Mr Hunt risks driving wealthy people out of the country.

On Sunday, Mr Hunt said he is aiming to build on autumn’s reduction in national insurance contributions but will only cut taxes in a "prudent, responsible and affordable way".

Speaking to LBC's Matthew Wright, Mr Hunt said his Budget was intended to help grow the economy in the long term, allowing for tax cuts later.

"Overall, I think what people want is not gimmicks, they want a long-term, responsible, sensible plan to grow the economy so we can bring down taxes and have enough money for public services in the future - and that's what I'll be delivering," he said.

Mr Hunt continued to say his approach to cutting tax is "very straightforward".

"If you look around the world, the countries that are growing the fastest tend to be the ones with lower taxes," he said.

"We need to boost our growth... but I will only ever cut taxes in a way that is prudent, responsible and affordable.

On Tuesday morning, the King held an in-person pre-budget audience at Buckingham Palace.

The monarch, who is being treated for cancer, has continued with his duties as head of state of meeting with Mr Hunt.

Usually, the audience is private but this time the King was photographed shaking hands with the chancellor in the private audience room.

More Latest News

See more More Latest News

Both of them received community orders

Two asylum seekers who stole £25k gold Rolex in London's Soho allowed to walk free

It doesn't have to be that warm for your sleep to be affected

Revealed: the temperature that means you may not be sleeping well as UK gripped by heatwave

Trump gunman researched Royal family member during planning for assassination attempt

Trump gunman researched Royal family member during planning for assassination attempt

US President Joe Biden

Joe Biden ‘more receptive to standing down after senior Democrats turn on President’ as he battles Covid

Vance hailed Donald Trump as America's "best hope".

Donald Trump is the 'best hope for America', says vice-president pick JD Vance

Grange Hill and London's Burning actor John Alford charged with sexual offences involving a child

Grange Hill and London's Burning actor John Alford charged with sexual offences involving a child

Sir Keir Starmer will not seek a returns agreement in a meeting with European officials today, David Lammy has said

Starmer not seeking migrant returns deal with European nations, Foreign Secretary tells LBC

The Labour Party's commitment to establishing Great British Railways (GBR) is a monumental step towards revolutionising our rail network, says Clive Wratten.

King Charles's Speech: Opportunity to Revolutionise British Transport

Jessica Lawson drowned on a school trip in 2015

French lifeguard and local council found guilty of manslaughter after Brit girl, 12, drowned in lake on school trip

James Jordan addressed the resurfaced video

Ex-Strictly star James Jordan hits back after resurfaced training footage from show sparks backlash

Sir Mark Rowley has launched a major recruitment drive

Met Police officer numbers drop as force calls for 'thousands of applicants' in new recruitment drive

President Joe Biden walks to his car after stepping off of Air Force One at Dover Air Force Base in Delaware, Wednesday, July 17, 2024. Biden is returning to his home in Rehoboth Beach, Del., to self-isolate after testing positive for Covid

Biden tests positive for Covid and cancels Vegas campaign event after saying he would only quit race on doctors' orders

Starmer is set to push for a migrant return deal with the EU

Starmer to push for new migrant return deal with EU, as he seeks to 'renew UK's relationship with Europe' at summit

Keir Starmer faces a challenge over the two-child benefit cap

Keir Starmer seeks to stave off Labour backbench revolt over benefit cap with child poverty taskforce

A man has been shot dead in Kirkby

Man shot dead on residential street close to Liverpool training ground, as police launch murder investigation

Joe Biden has hinted he could step aside from the race against Donald Trump for the White House

Biden hints he could quit election race against Trump on medical advice, as top Democrat calls for him to stand down