2% cut in national insurance expected in Spring Budget 

Conservative promise of tax cuts might be popular with some voters but many fear the impact this will have on public services. 

The Times is reporting that a 2% cut in national insurance contributions will be announced tomorrow (March 6th) as part of the Chancellor’s Spring Budget. 

Jeremy Hunt on Budget Day, March 2023, photo courtesy of HM Treasury

Poll after poll is suggesting the Conservatives will do badly at the next general election – which must take place within the next year – unless they can find some way to win over voters. Tax cuts have always been popular in the past but can come at a cost. 

Proposals to increase inheritance tax have often been unpopular with Conservative voters. Now it seems that increasing income tax is thought too expensive and risks increasing the already high rates of inflation. So, national insurance it is – again. 

According to the Times report, the new cut will cost the Exchequer some £10bn but save the average worker (earning £35,400) some £450 per year. It’s thought Chancellor Jeremy Hunt will combine this with the 2% cut to national insurance introduced on 6 January to tell people they’re now better off by £900. 

A report on Sky News suggests the new cut to NI contributions will be introduced in legislation put through Parliament next Wednesday, March 13th, and so come into effect from April. 

That suggests people could feel the benefit of the cut very quickly. Yet critics say that the January cut to NI contributions was offset by the ongoing freeze on personal tax thresholds – so people still end up paying the same if not more tax. 

Then there’s the broader consequence of such a cut on already struggling public services such as the NHS and social care. 

Sam Monaghan, Chief Executive of national charity care provider MHA, says: ‘There’s a gaping chasm between government funding for social care and the cost of providing care. In reality, we’re not expecting this shortfall to be addressed when the Chancellor outlines his Spring Budget this week. 

‘But what we do want is for all political parties to present a credible, sustainable plan to put to voters ahead of the next General Election. This is why we’ve been asking our supporters to write to their local MP, to ensure social care remains high on the agenda. 

‘The sector has reached a crisis point. There are nearly half a million people waiting to be assessed and an estimated 152,000 staff vacancies in the sector. Local authorities are falling into bankruptcy, NHS waiting lists are growing and older people are too often not getting the choice and quality of care they deserve. 

‘We know that fixing these problems will require significant investment and that whoever forms the next government will need to increase funding in an affordable and manageable way. But this does not prevent the main political parties from demonstrating that they understand the sector’s needs and are willing to tackle its issues head on. We’ll wait and see what Wednesday brings.’

In related news:

NHS waiting lists unlikely to recover from pandemic within next parliament

New study links hospital privatisation to worse patient care

Social care is suffering, we can at least let people age gracefully