Spring Budget 2024

March 6, 2024

Jeremy Hunt presented his Spring Budget today, revealing various fiscal measures to boost economic growth. Among the key announcements was the introduction of a British ISA to rejuvenate London’s struggling equity market.

Hunt also disclosed a reduction in National Insurance from 10 to 8 per cent, a detail widely publicised before the budget announcement. Other changes encompassed the elimination of the non-dom tax regime and an elevation in Air Passenger Duty for non-economy class travellers.

Chancellor Jeremy Hunt also outlined reforms to the High Income Child Benefit Charge, deeming it “unfair.” The charge will now be assessed on a household basis starting in 2026. This budget, seen as one of the final opportunities for the Tories to regain public favour ahead of the general election, underscores the delicate balance Hunt must strike between public preferences, fiscal constraints, and the concerns of backbenchers.

Despite these measures, they are unlikely to impact public sentiment significantly. Traditional Conservative beliefs assert that tax cuts resonate with their voter base, as evidenced by the reduction in National Insurance and the freeze on fuel duty. However, as indicated by polls, public opinion suggests a wariness towards tax cuts. The public is more inclined towards increased public spending to address the strain on essential services.

The hope lies in these tax cuts becoming pitfalls for the Labour Party during an election campaign. Lowering the tax revenue may force Labour to reconsider their spending plans or commit to reversing Hunt’s tax cuts. This could challenge the opposition as their intentions face greater scrutiny during a campaign. Nevertheless, the electoral deficit may prove insurmountable by that point.

Hunt’s strategic moves include measures to neutralise the Labour Party’s offensive. Extending windfall taxes on the gas and oil sector and curtailing non-dom status align with popular opposition policies. Although these actions deviate from traditional Conservative principles, they counteract Labour’s electoral advantage in advocating these policies.