At the Autumn Statement last year, Jeremy Hunt used most of his “headroom” to introduce a series of genuine “pro-growth” measures: making “full expensing” permanent (a big tax break for companies), increasing the government’s spending on computing power to develop artificial intelligence and further fleshing out its £2.5bn national quantum strategy. He also used £9bn of it to cut national insurance by 2p in a bid to turn around the Conservative party’s flagging electoral fortunes, and because, quite frankly, the internal pressure within the Tory party to do it had become irresistible.
So how successful was the 2p tax cut? In terms of the Conservative-Labour battle, not at all. Since the last fiscal statement, the polls have if anything worsened for the Conservative party. On Monday, polling by Ipsos put Tory support at 20 per cent, the lowest level since its survey began in 1978. The Conservatives have lost three by-elections on the bounce. But in terms of the internal battle within the Tory party, the national insurance cut has done its job, in that Rishi Sunak is still prime minister.
That’s the important political context to understand when Hunt will essentially try to do the same thing with a further 2p cut in national insurance. He will also hope that scrapping the “non-dom” tax regime will cause problems for Labour.
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