"In January 2024, the then chancellor Jeremy Hunt implemented a cut in employee national insurance contributions. Four months later he announced a further reduction from 10% to 8% and even hinted that he was considering abolishing employee contributions altogether. It was the mother of all election bribes, costing the exchequer about 10bn a year. It was also entirely cynical, offered in the absolute confidence that the Tories would not be in office long enough to grapple with the consequences."
"The sensible reply would have been to say: We will decide if and when we are elected, and discover how much of a mess you have left us. She might also have added, And, by the way, the next election will not be about tax cuts. It will be about the dreadful state of the public sector. Instead, however, Reeves fell headlong into the trap Hunt had set, promising not only that she would not reinstate his cuts, but incredibly going further and promising not to raise any of the main sources of revenue: income tax, VAT or national insurance."
Jeremy Hunt enacted significant employee national insurance cuts in 2024, reducing contributions and hinting at abolition, costing the exchequer about £10bn annually. The cuts were presented as an electoral sweetener intended to leave future governments to manage the fallout. Labour faced a strategic choice when challenged to commit on reinstating the taxes. Rather than defer judgment until after an election, Labour pledged not to reinstate the cuts and additionally promised not to raise income tax, VAT or national insurance. That pledge narrowed fiscal options and left the party politically exposed on tax and public services.
Read at www.theguardian.com
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