Yahoo Finance Jeremy Hunt admits National Insurance won’t be scrapped ‘any time soon’
Jeremy Hunt has admitted scrapping National Insurance (NI) won’t happen “any time soon” despite appearing to hint at in Wednesday’s Spring Budget.
The Chancellor yesterday said he wants to “end the unfairness” of the system of double taxation on work but that eliminating contributions altogether would be a “huge thing to do”.
It came as he cut NI contributions by two per cent in the Spring Budget in what was framed as a tax cutting fiscal event ahead of the general election.
But Hunt told Times Radio abolishing the measure, which goes towards the welfare state, was a “huge job… I don’t think it’s realistic to say that’s going to happen any time soon”.
And speaking to Sky News, he suggested the government could potentially “merge” national insurance and income tax.
Labour furiously criticised the idea, with shadow chief Treasury secretary Darren Jones writing to Hunt to demand to know how he would pay for abolishing NI.
“It is vital you immediately spell out how you plan to pay for this latest unfunded tax cut – a move that would cost £46bn a year, or £230bn over a five-year parliament,” he said.
Jones added: “Your predecessor’s disastrous mini-budget included £45bn in unfunded tax cuts, crashing the economy and sending mortgage rates soaring for millions of households.
“Just like Liz Truss, you have so far refused to set out how you are going to pay for this latest shake of the magic money tree.”
Shadow chancellor Rachel Reeves also said talk of abolishing NICs was “irresponsible” and drew parallels with the Truss mini-budget, which unleashed economic chaos.
“I think it is really irresponsible to start making promises without the faintest idea of where the money’s going to come from,” she told ITV’s Good Morning Britain.
It comes as expert Budget analysis suggested this Parliament is the first in modern history to see a drop in living standards, with real household disposable income to fall by 0.9 per cent.
Downing Street said the government’s “long-term” aim to end NI will only be done “when it is responsible and can be achieved without increasing borrowing.”
Asked how the measure would be funded, the Prime Minister’s official spokesman said: “I’m not going to speculate any further the sort of timetable and exactly how we would do that.
“But obviously the government has been very clear that it is focused on reducing taxes for working families as it has now consistently delivered over the last two fiscal events.”
