The chancellor is preparing to announce the second big cut to employment taxes in a year, after his decision to cut national insurance rates by 2p at last year’s autumn statement, portraying it as a pre-election giveaway
Jeremy Hunt’s proposed national insurance cut, which he is expected to announce during his budget later today, will overwhelmingly favour the richest households while doing very little for poorest households who are struggling to make ends meet.
The chancellor is preparing to announce the second big cut to employment taxes in a year, after his decision to cut national insurance rates by 2p at last year’s autumn statement, portraying it as a pre-election giveaway.
However, analysis from the New Economics Foundation (NEF) shows that the richest households stand to gain 12 times more from the national insurance cut than the poorest.
The NEF says that the tax cut would hand billions to the richest households while offering much less to those in need and adds: ‘It would cost us billions which we could spend on vital public services like schools or the NHS’.
The chart below shows how an additional cut in national insurance will benefit the richest households the most.
The think tank also warns that an NI cut will exacerbate regional inequality, with households in London and the South East standing to benefit the most.
Sam Tims, senior economist at the New Economics Foundation said: “Everywhere you look, from our schools to hospitals to high streets, our country is falling apart at the seams while millions of people struggle to get by. Yet at the same time our chancellor is pushing for tax cuts that the country does not want, and that will benefit those who already have the most.
“Not only will this reduce government income in the immediate future, but it will also worsen inequality making us all poorer and harming the country’s prospects.
“The responsible way of running our economy is to borrow to make smart investments that boost our economy and improve people’s lives. We should raise money by increasing taxes on the very wealthiest. Investing in our schools, hospitals, housing, and income safety net creates economic benefits and helps everybody live happier, healthier lives.”
Basit Mahmood is editor of Left Foot Forward
To reach hundreds of thousands of new readers and to make the biggest impact we can in the next general election, we need to grow our donor base substantially.
That's why in 2024, we are seeking to generate 150 additional regular donors to support Left Foot Forward's work.
We still need another 124 people to donate to hit the target. You can help. Donate today.