Spring Budget 2024: Forget a National Insurance cut – a fix on fiscal drag would trap Labour
Spring Budget 2024: Jeremy Hunt is expected to deliver a national insurance cut - but fiscal drag is more of an issue
Unless Jeremy Hunt produces a genetically-modified rabbit of alarming proportion in tomorrow’s budget, the legacy of this Conservative government on matters of tax and spend will be an ugly one; and it is not all the fault of ballooning government spending during the pandemic.
Within hours of whatever tax cut we receive – liable to be a penny, maybe two, off national insurance – the graphs will emerge that show Brits are still paying a record amount of their income back into the Treasury. One of the Coalition’s first moves back in 2011 was to not cancel the planned increase in VAT, setting it at, and leaving it at, 20 per cent.
Since then the ratchet has only continued. That fiscal drag has entered the national lexicon is a further, depressing sign of a government that has failed to live up to the tax-cutting rhetoric of the cast of thousands who have occupied Nos 10 and 11.
Rather than a super-sized leporidae, then, perhaps Hunt could assess the electoral logic and decide it makes more sense to trap his opponents by fixing fiscal drag.
Far better than a one-off cut would be, for instance, to tie the higher and additional rate thresholds to inflation, much like a triple lock.
Such a move would be almost impossible for the opposition to reverse, and even better for those of a small-state persuasion, force any incoming Labour government to take on productivity in the public sector in the way that only a left-wing party can. It would be good policy, and one could just about swing an argument that it’s good politics, too.
Alas, such long-termism is out of vogue in British politics. Both parties continue to bury their head in the sand on everything from generational inequality to our ticking demographic timebomb.
The absurd theatre of the budget shouldn’t distract from the radical handbrake-turn Britain needs – away from a patrician state and back to the free market principles that made it, once, a buccaneering economy.
