Budget 2024: Jeremy Hunt hints he will cut taxes

Jeremy Hunt has hinted he will deliver tax cuts when he delivers the budget on Wednesday.

The Chancellor is under increasing pressure from Conservative MPs to cut taxes, which have now reached a historic level.

He told the BBC he wanted to “show a path” to a low-tax economy, but stressed he would only do so in a “responsible” way.

Labor said people would be worse off no matter what it did “thanks to 14 years of Tory failure”.

Among the measures Hunt is believed to be considering is a further cut in National Insurance, which was already reduced from 12% to 10% in the autumn statement last year.

In an interview on the BBC Sunday Program with Laura Kuenssberg, Hunt said the budget, when the government sets out its tax and spending plans, would focus on “longer-term growth”.

“When we look around the world, the economies that are growing the fastest, whether it's North America or Asia, tend to be the ones that have lower taxes,” he said.

Hunt pointed out that the government has always said that it will only cut taxes in a “responsible and wise” way.

He continued: “The most moderate thing I can do is to reduce taxes by increasing borrowing.

“But I want, when it can be done responsibly, to move toward a low-tax economy, and I hope to point a way in that direction.”

Despite last year's National Insurance cuts, with a general election looming at the end of January, the total amount of tax people pay is on track to reach record levels.

At the start of this year, the Government's independent economic forecaster, the Office for Budget Responsibility (OBR), estimated that the Chancellor would have around £30bn of “extra room” in the budget.

This estimate came after a sharp decline in borrowing costs, and would have provided more scope for tax cuts.

But since then, borrowing costs have started to rise again, and by the middle of last month, the BBC understands the figure had returned to its November level of almost £13bn.

With the government's spending rules, the Office for Budget Responsibility holding its neck tight on one side, and a Tory backbench who wants to cut historically high taxes, this is not a comfortable position.

However, there is widespread expectation in Westminster that he will cut some taxes, even if the moves are not significant.

Labour's Shadow Chancellor of the Exchequer, Darren Jones, said: “The Chancellor of the Exchequer says he wants to cut taxes, but it was the Conservatives who raised taxes to their highest level in 70 years.”

“No matter what the Chancellor does in the Budget this week, Labor will be worse off thanks to 14 years of Tory failure.”

Paul Johnson, director of the Institute for Fiscal Studies (IFS), told the BBC that any tax cut in the budget is “likely to be reversed after the next election, whoever wins”.

The Institute for Fiscal Studies also warned that further tax cuts would likely mean spending cuts in the future.

Asked whether the government should spend more on public services, rather than tax cuts, Hunt said: “I think what most people want is better public services and a lower tax burden.”

“The only way we have a chance of achieving something like this is to spend the money we spend on public services more efficiently.”

Andy Haldane, former chief economist at the Bank of England, told the program he believed the government's self-imposed spending limits – known as “fiscal rules” – were “holding back” economic growth and restricting the chancellor's decisions.

These include access to debt as a proportion of the size of the declining economy over five years.

Hunt said he disagreed with the government needing to change its financial rules because “people will interpret that as Britain losing control of its finances.”

Recent memories of the collapse in financial markets following Liz Truss's mini-Budget in 2022 – which included £45bn of unfunded tax cuts – are a reminder of why such rules exist.

But there appears to be growing concern that a system meant to ensure stability could also have a negative impact.

People who do not have non-resident status are UK residents who live abroad for tax purposes. Under the current system, they do not have to pay UK tax on money they earn abroad.

Hunt has previously defended the tax status, saying it helps make the UK an attractive place for wealthy people to live and work.

Labor has pledged to scrap non-resident status and spend the money raised on schools and the NHS.

If the party backs any tax cuts announced by the finance minister, which it is expected to do, this would leave questions about how some of its spending pledges will be financed.

Hunt declined to comment on any potential changes to specific taxes.

However, he told the BBC: “The country sees through the tricks and we will not be doing the tricks on Wednesday.”