“Is that box going to win you the election, Chancellor?”
As he stood outside 11 Downing Street brandishing his famous Red Box, the UK Chancellor of the Exchequer, Jeremy Hunt, will have been contemplating the answer to that barked question from a BBC journalist.
Last week, Hunt delivered what he called ‘a Budget for long-term growth’ against a difficult backdrop. British politics has seen a tumultuous few weeks and was undoubtedly crying out for stability, but this felt more like a short-term package aimed at shoring up Conservative political fortunes.
Two years ago, then-Chancellor Rishi Sunak told Parliament that “I can confirm, before the end of this Parliament in 2024, that the basic rate of Income Tax will but cut from 20 to 19 pence in the pound.”
How times have changed. With a recession on his hands and consequently less fiscal headroom than he hoped for, Hunt went into the weekend speaking of his ambition to embark on what he called the ‘long path’ to tax cuts. Hamstrung by a self-imposed rule to have debt falling as a share of GDP within five years, in the end he settled for a 2% cut to National Insurance Contributions.
The Chancellor will also have been acting under orders from the Prime Minister to deliver a Budget to preserve what remains of Party unity. As restive Tory MPs eye the most difficult election since 1997 unfurling before them, the Budget was the last opportunity to make announcements that can be implemented by polling day.
Ultimately, this was a Budget delivered by a Government which appears to be caught between two mindsets. On the one hand, through headline-grabbing measures such as the National Insurance cut, there is a clear attempt to appeal to voters ahead of the election by showing them it’s the Conservatives who believe in and are delivering some tax cuts. On the other, some policies have created more questions than they’ve answered – perhaps this Budget was, as Labour leader Sir Keir Starmer called it, ‘the last, desperate act of a Party that has failed.’
Read EGA's UK Spring 2024 Budget Analysis by downloading below.
