Rishi Sunak and Jeremy Hunt 'aim to axe National Insurance entirely', as Labour call Budget 'damp squib'

6 March 2024, 22:32 | Updated: 7 March 2024, 00:22

Jeremy Hunt and Rishi Sunak have suggested they want to cut National Insurance entirely
Jeremy Hunt and Rishi Sunak have suggested they want to cut National Insurance entirely. Picture: Alamy

By Kit Heren

Rishi Sunak and Jeremy Hunt have signalled they want to scrap National Insurance altogether, after a Budget that saw contributions cut.

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Mr Hunt announced a 2p cut to National Insurance contributions for employees in his Budget on Wednesday, from 10%-8%, with the change to come into effect from April 6. The cut would save around £450 a year for someone on a full-time salary of £35,000.

The Chancellor told the House of Commons that he national insurance contributions on top of income tax amounted to "double taxation" and said he wanted to "end this unfairness".

National Insurance contributions are paid by employees and the self-employed on their earnings, as well as employers. The amount paid depends on an individual's salary.

Mr Sunak said on Wednesday evening that abolishing National Insurance was "our ambition long term", without giving a schedule. The tax cut could reduce government revenues by around £50 billion per year.

Read More: Budget at a glance: What measures did the Government announce?

Read More: Hunt hands £450 to millions and overhauls child benefit in 'tax-cutting' budget - but bad news for non-doms and smokers

Andrew Marr provides his analysis of today’s Budget

He said: "Our country faces a profound choice. If the opposition win this year, they will use the shocks of the last few years, or the need to transition to net zero, to justify massively bigger government. It means more influence for vested interests and trade unions.

Mr Sunak said of Margaret Thatcher, the Conservative PM from 1979-1991, that she "knew that hard work should be rewarded, and any extra penny our country earns is better spent by businesses and individuals than by the state. All else equal, lower taxes are better for growth."

It comes after Treasury minister Bim Afolami earlier told LBC thatthe Conservative government wanted to wipe out National Insurance tax if re-elected at the next general election.

Bim Afolami on National Insurance

Mr Afolami told LBC's Andrew Marr on Wednesday evening that the Conservatives would "continue along the track" of cutting taxes, and eventually want to disband National Insurance altogether.

"To be clear, we've cut a third [of National Insurace] in the space of five, six months. We'd like to continue along that track," Mr Afolami told Marr, before confirming the Conservatives would like to wipe out the other two-thirds eventually.

"I'm not putting a time-point on that and I want to be clear about that. It's important we only do that when we're not going to be borrowing extra money to pay for it, and we secure good public services."

Rishi Sunak and Jeremy Hunt on Wednesday
Rishi Sunak and Jeremy Hunt on Wednesday. Picture: Getty

Asked about a promise made by Rishi Sunak when he was Chancellor, claiming the Conservatives would cut income tax by the next election, Mr Afolami refused to confirm if the plan was still in place.

"I don't want to suggest what will happen beyond this event," the treasury minister said.

He also refused to confirm if the Conservative government was planning to deliver another Budget in the Autumn ahead of a general election later this year.

"What happens in the coming weeks and months, happens," Mr Afolami concluded.

Chancellor of the Exchequer Jeremy Hunt records a broadcast clip after delivering his Budget, Wednesday
Chancellor of the Exchequer Jeremy Hunt records a broadcast clip after delivering his Budget, Wednesday. Picture: Alamy

Labour questioned how the government would pay for getting rid of National Insurance en.

Darren Jones, the shadow chief secretary to the Treasury, said: "If the Tories are going to make promises to the electorate, they should say how they're being funded.

"Mortgage holders across the country know only too well the consequences of pie in the sky, unfunded Tory promises on tax cuts. But today's budget reveals Rishi Sunak is in hock to the reckless voices who want to re-run the Liz Truss experiment.

Labour earlier criticised the government after the Budget announcement, and said that people are still paying high rates of tax because of frozen tax brackets, despite the National Insurance cut.

Shadow Chancellor Rachel Reeves told LBC's Iain Dale that a Labour government would seek to cut taxes, although she could not make a firm commitment.

Addressing the prospect of the Conservatives scrapping National Insurance altogether, a Labour spokesperson told the Telegraph: "We will comment on policy, not weird commitments designed to give a bit of a lift to a Budget which does seem to have been a bit of a damp squib for some of his backbenchers."

Shadow Chancellor: An incoming Labour government would want to 'cut taxes'

During his Budget, Mr Hunt also announced that earners on up to £80,000 will get child benefit, rather than the £60,000 where it currently stands.

Fuel duty is also being frozen for the 14th year, and alcohol will also continue to be held for another six months.

Mr Hunt further announced a crackdown on non-doms, vapers and smokers and curbed tax breaks for landlords.

Ben Kentish: 'I think this was the most non-eventful, non-descript Budget I've ever seen...'

He said that the current tax system for non-doms, which allowed some wealthy individuals to avoid paying tax on their foreign income, will be abolished in a measure expected to raise £2.7 billion.

Under the plans today the average price of a packet of 20 cigarettes is set to soar past £16 for the first time.

Vapes are also being targeted in a bid to reduce the rate of underage vaping.

Before the tax increase the mean cost of a packet of 20 stood at £15.26 in January, according to the Office for National Statistics.

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