Chancellor Jeremy Hunt announced a plan to cut 2p off national insurance, as well as freezes on alcohol and fuel duties in the spring budget. (WPA Pool via Getty Images)
Chancellor Jeremy Hunt has delivered his budget to the House of Commons, announcing a plan to cut another 2p off national insurance, as well as freezes on alcohol and fuel duties.
The NI move will cost move £10bn, and when combined with the 2p cut announced in November last year, which took effect in January, the latest move will save the average worker a combined £900.
National insurance is being cut for employees by another from 10% to 8%, and for the self-employed it will drop form 8% to 6%.
"It means an additional £450 a year for the average employee or £350 for someone self-employed," Hunt said. "When combined with the autumn reductions, it means 27 million employees will get an average tax cut of £900 a year and 2 million self-employed a tax cut averaging £650. Changes that make our system simpler and fairer. And changes that grow our economy by rewarding work."
Alcohol duty will remain frozen until February 2025, benefitting 38,000 pubs across the UK. This is on top of the £13,000 saving a typical pub will get from the 75% business rates discount announced in the autumn, the chancellor said.
Fuel duty was also frozen for 12 months. Hunt said: "It will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250.
"Taken together with the alcohol duty freeze, this decision also reduces headline inflation by 0.2 percentage points in 2024-25 allowing us to make faster progress towards the Bank of England’s 2% target."
It comes as the UK economy is expected to grow 0.8% this year and 1.9% next year, 0.5% higher than the OBR’s autumn forecast. Hunt told MPs: “After that growth rises to 2%, 1.8%, and 1.7% in 2028. Because we have turned the corner on inflation, we will soon turn the corner on growth."
Here's Reuters' Andy Bruce giving a summary on that:
💥 OBR boss Hughes shows how precarious the so-called £8.9 billion of headroom is.
Factors that could whittle it away: • Freezing fuel duty again (£4.5 bln) • Small changes in econ outlook • Lack of any detailed spending plans beyond current Spending Review period
Some analysts are complaining the housing sector didn't get enough of a look-in in the budget.
Given the number of column inches taken up by discussion about what the Government might do in the budget to fix the housing market and curry favour with this important voter group, we were somewhat shocked and surprised that housing was mentioned so little.
As the chancellor spoke, we had thought that he was whetting our appetite with the investments to get Barking Building, but even this bark was bigger than the budget's bite," said Anthony Codling MD of equity research for European housebuilding at RBC Capital Markets.
LaToya Harding
Spring Budget commentary in housing
Nick Leeming, chairman of Jackson-Stops, said:
“As Conservative support hits its lowest level for more than 40 years according to Ipsos polling, and with property transaction volumes at an 11 year low, many of us were rightly hopeful of a clear priority plan on property from the chancellor today.
"Yet with nothing to lose, and a statement of over an hour, it seems Hunt has gone for a rabbit in headlights approach on housing with major changes to property taxation avoided.
"For many voters ready to hit the polls in a matter of months, the decision to not address supply issues that have been slowing down homeownership for huge swathes of the country for a number of years, could be a defining moment for the current government.
"If the property market is looking for a small win to be taken from today, the cut to property capital gains tax from 28% to 24% should, to some extent, increase the number of transactions particularly within the prime market.”
LaToya Harding
Tory leader attacks North Sea oil tax plans
Douglas Ross (Kay Roxby)
Douglas Ross, the Scottish Conservative leader, has criticised the government’s plans to extend the windfall tax on North Sea oil and gas:
There are many positive measures in the Chancellor’s budget which I strongly support ...However, while I accept the Chancellor had some tough decisions to make, I’m deeply disappointed by his decision to extend the windfall tax for a further year.
The SNP and Labour have abandoned 100,000 Scottish workers by calling for the taps in the North Sea to be turned off now.
Although the UK Government rightly oppose this reckless policy – and have granted new licences for continued production in the North Sea – the budget announcement is a step in the wrong direction.
As such, I will not vote for the separate legislation needed to pass the windfall tax extension and will continue to urge the Chancellor to reconsider.
LaToya Harding
Are we better off now than 14 years ago?
Earlier today Keir Starmer told MPs that the economy is smaller than when Rishi Sunak entered Downing Street.
He said billions had been wasted on schemes such as the COVID fraud taskforce, the Rwanda scheme, and the scrapping of HS2.
"Billions upon billions for a white elephant without a trunk," he said.
It comes as Labour asked people in the UK public if they were better off than they were 14 years ago. Here's what they said:
We asked people if they were better off than they were 14 years ago.
Victor Trokoudes, founder and CEO at smart money app Plum:
"It appears yet again that this Budget had little to offer younger generations who are struggling with their personal finances and missing out on the economic security available to older generations, whether defined benefit pensions, lower student fees or access to affordable housing.
"The combined reductions of 4p to National Insurance will make a significant difference to people’s financial position. But, for many taxpayers, this reduction is still dwarfed by the overall impact of tax thresholds being frozen till 2028 that is dragging more and more people into paying higher rates of income tax."
Child benefit and childcare
"We need to see a fairer system for families with children, particularly with regard to childcare. At Plum we’ve been campaigning for over a year to improve support for working parents and providers, as childcare prices have increased for 3 out of 4 parents in the past year alone.
"While it's welcome that the Chancellor acknowledged the importance of childcare and financial support for childcare providers, it's not clear whether today's announcement of 'guaranteed rates' will be enough to help providers deliver the additional free childcare hours from April. Although 'guaranteed rates' may help them with future planning, any failure to substantially raise the hourly rate means many parents may well face dismay and disappointment when they find their provider is unable to deliver this support as they’re unable to cover their costs.
"Unfair support cut-offs for child benefit and tax-free childcare also disadvantage hard-working families, particularly single parents, so we’re especially pleased to see this is being addressed. We welcome the consultation to change the basis of this support to overall household income, rather than the earnings of a signal individual, as this is fairer. Combined with the increase of the threshold to £60,000 and changes to the taper for this support, these changes will expand access to this important benefit. This is especially critical when so many other essential childcare costs have increased."
Housing
"The biggest financial challenge young people face is affordable housing, and there’s very little here to help on that front. Our recent analysis found that 25-34 year olds are being hardest hit by rising interest rates on mortgages, with prices going up by 51% in the past year. That’s compared with 40% for the 35-44s and 32% for the 45-55s.
Over 1.5 million households are due to remortgage this year, and will be anxiously hoping to see further drops in mortgage rates, given expectations of base rate cuts from the Bank of England. There was nothing in today’s budget to reassure them."
LaToya Harding
Average personal taxes now at lowest level since 1975
From April employee national insurance will be cut from 10% to 8%, and self-employed from 8% to 6%.
With the changes announced in the autumn statement, 27 million people will gain £900. And 2 million self-employed people will gain £650.
He said the OBR says this will put 200,000 more people in work. And it will increase GDP by 0.4%, he said. This will bring personal taxes to their lowest level since 1975.
LaToya Harding
UK Finance response to budget
Responding to the chancellor's budget delivered today, David Postings, chief executive of UK Finance, said:
“This is a Budget that rightly continues to focus on delivering growth and supporting businesses and households across the country, key priorities for the financial services industry.
“SMEs are the backbone of our economy, and we therefore welcome the new Growth Guarantee Scheme, ensuring these businesses can access the funding they need to invest and grow.
“The chancellor’s plans for a new UK ISA will enhance investment in UK companies and increase the levels of retail investment. We welcome his focus on promoting ownership of UK stocks and helping more people save for the long term."
LaToya Harding
Tax burden to hit highest level since 1948
The OBR has published its latest forecasts for the economy:
Tax burden still predicted to rise to 37.1% in 2028-29, highest since 1948 (when it was 37.2%). BUT still 4 pp above pre-pandemic level of 33.1%of GDP in 2019-20. pic.twitter.com/S10hJL2vKL
Hunt will consult on a new rule to make the benefit to apply to collective household income, rather than on an individual basis, which he aims to introduce by April 2026.
But, as a more imminent help, Hunt announces the threshold will go up from £50,000 to £60,000.
And the top of the taper at which it is withdrawn will go up to £80,000, from the current £60,000.
LaToya Harding
Stamp duty relief abolished
Andrew Matthews, PA Images
Stamp duty relief for people buying more than one dwelling is being abolished due to the fact that it was being regularly abused, Hunt said.
I have also been looking at the stamp duty relief for people who purchase more than one dwelling in a single transaction, known as Multiple Dwellings Relief.
[It was] intended to support investment in the private rented sector. However, an external evaluation found no strong evidence that it had done so and that it was being regularly abused. So I am going to abolish it.
LaToya Harding
New tax on vapes
There has also been a new tax on vapes, and a one-off increase in tobacco duties.
Hunt confirmed that there will be an increase in the tax on non-economy flights.
TAX HIKES: VAPES: Duty on vaping coming in Oct 2026 CIGS: One off increase in tobacco duty FLIGHTS: One off adjustment to Air Passenger Duty on non-econ flights (£4.5bn across forecast period) HOLIDAY LETS: Abolish furnished hol lettings tax loophole & multi dwellings relief
Hunt has told MPs that the NHS needs modernisation.
Modernising its IT system will cost £3.4bn but will unlock productivity savings worth 10 times as much, he said.
"This will double the NHS investment in digital transformation."
The move means NHS funding has gone up by 13% in real terms since the start of this parliament.
LaToya Harding
Film industry to benefit from budget
(Credit: Pinewood Studios Ltd)
"Having worked closely with the Culture Secretary and listened carefully to representations from companies like Pinewood, Warner Brothers and Sky Studios, we will provide eligible film studios in England with 40% relief on their gross business rates until 2034."
Hunt also pledged £26m for the National Theatre to improve its stages.
LaToya Harding
New British ISA announced
A brand new British ISA has been announced to encourage more people to invest in UK assets.
This will allow an additional £5,000 annual investment on top of the existing £20,000 ISA allowance.
Investing expert at the personal finance comparison site, Matt Mckenna, said:
"The big question about the British ISA was whether it would eat into the existing £20,000 annual allowance or be added as an extra on top. The fact that the chancellor has given an additional £5,000 to accommodate this is a sensible move and I respect the ambition of a British ISA.
"In my opinion, it is reasonable for the British government to try and stimulate growth in its domestic market and this ensures UK investors won’t have to curb their current foreign investment plans.
"What is important is that investors are aware of the recent underperformance of the FTSE when compared to a lot of other global markets. However, this is already a dilemma for investors - adding extra allowance simply gives them another opportunity to invest that they don’t need to take if they don’t wish to".
LaToya Harding
Chancellor "claiming credit" for inflation reduction
Prof Stephen Millard, deputy director of NIESR said:
"The chancellor is trying to claim the credit for bringing inflation down. This is the job of the Bank of England's MPC and they should get the credit for this. Political interference in monetary policy is not something that we should welcome."
LaToya Harding
OBR: UK economy to grow 0.8% in 2024
bridge over Thames river in London, England (casa.da.photo)
The UK economy is expected to grow 0.8% this year and 1.9% next year, 0.5% higher than the OBR’s autumn forecast.
Hunt told the House of Commons on Wednesday: “After that growth rises to 2%, 1.8%, and 1.7% in 2028.
"Because we have turned the corner on inflation, we will soon turn the corner on growth.
Hunt urged Labour MPs to listen to him as “they don’t have a growth plan”, adding: “Our plan is for economic growth not sustained through migration but one that raises wages and living standards for families.”
LaToya Harding
Household support fund extended
The Household support fund, which allows local councils to help families via food banks, warm spaces and food vouchers, will be extended beyond 31 March, the chancellor has said.
It will continue for another six months,
LaToya Harding
Fuel duty also frozen for 12 months
"Another cost that families and businesses worry about is fuel. The Shadow Chancellor complained about the freeze on fuel duty and Labour has opposed it at every opportunity.
"The Labour Mayor of London wants to punish motorists even more with his ULEZ plans. But lots of families and sole traders depend on their car. If I did nothing fuel duty would increase by 13pc this month."
Jeremy Hunt said that duty freezes would help inflation.
"It will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250.
"Taken together with the alcohol duty freeze, this decision also reduces headline inflation by 0.2 percentage points in 2024-25 allowing us to make faster progress towards the Bank of England’s 2% target"
LaToya Harding
Alcohol duty frozen
Smiling Barman pulling a pint, in a craft beer bar, with many craft beer taps, Edinburgh, Scotland, UK (Tony Smith)
Alcohol duty will remain frozen until February 2025
"I have decided to extend the alcohol duty freeze until February 2025.
This benefits 38,000 pubs all across the UK – and on top of the £13,000 saving a typical pub will get from the 75% business rates discount I announced in the Autumn.
"We value our hospitality industry and we are backing the great British pub."
LaToya Harding
Hunt: Inflation soon to fall below 2% target
Inflation set to fall below the Bank of England's 2% target "in a few months time" the chancellor has said, pointing to the latest forecasts from the Office for Budget Responsibility (OBR).
When he came into office inflation was 11% and it now stands at 4% he said.
"This is nearly a whole year earlier than expected, that didn’t happen by accident.”
Chancellor says OBR forecasts inflation will fall below 2% in “just a few months time”.
He credit “sound” finance from the Conservative government.
Of course when inflation soared to above 11% the Conservative government said that wasn’t their fault - was due to war/Covid etc.
Jeremy Hunt is now speaking in the House of Commons
Here we go...
He began the speech talking of the need to “fight extremism,” remembering Muslims who died in the two world wars.
He went on to announce a funding for a memorial. He said:
"I start today by remembering the Muslims who died in two world wars in the service of freedom and democracy. We need a memorial to honour them, so following representations from the Rt Hon Member for Bromsgrove and others, I have decided to allocate £1m towards the cost of building one.
"Whatever your faith or colour or class, this country will never forget the sacrifices made for our future. In recent times the UK economy has dealt with a financial crisis, a pandemic and an energy shock caused by war in Europe."
LaToya Harding
NIESR on spring budget
Paula Bejarano Carbo, economist at NIESR, said:
"Today’s spring budget is taking place against a backdrop of low economic growth, as seen most notably by GDP per head being lower in the last quarter of 2023 than just before the pandemic (2019 Q4).
While increasing real wages have improved conditions for many households in recent months, long-term economic prospects will remain weak without growth-enhancing fiscal policies, such as a commitment to increasing public investment.
We therefore hope today’s Budget focuses on the long-term, rather than pre-election giveaways."
LaToya Harding
What are members of the public saying about the budget
Today is #Budget2024 - and we’re going to see the Tories end as they began with cuts, cuts, cuts. The country is desperate for investment but these scorched earth ideologues are instead going to raid public purse to tune of 10bn+ in desperate election bid.https://t.co/eFnr2wdpgG
The government has been urged to scrap the "roll tax" on toilet paper. Here are a few interesting facts...
Most (7 in 10) Brits do not know that toilet roll is classed as a ‘luxury’ item with 20% VAT – but the likes of helicopters and caviar are zero rated
This ‘roll tax’ costs us £247m every year with each household spending the equivalent of an extra three days of petrol or two weeks of fresh produce
Who Gives A Crap has joined forces with charity partners including The Hygiene Bank and Bloody Good Period to call on the Chancellor to ‘Scrap the Roll Tax’ in his Spring Budget.
LaToya Harding
Hunt: “Great budgets change history”
Jeremy Hunt has stated “great budgets changed history”...
The Treasury released a video of the chancellor this morning analysing his announcements in the November autumn statement.
“Great budgets change history," he said. "The bit of history I want to change is to show people it is possible if we stick to a plan through all the ups and downs, through all the challenges, it’s possible to have healthy growth, good public services and to bring down taxes.”
Hunt poses with his ministerial team in Downing Street, London (Sipa US, Sipa US)
Chancellor Jeremy Hunt has been photographed leaving 11 Downing Street, with the famous red box.
After this morning's Cabinet meeting he will now make his way to the House of Commons where the Budget will be delivered at about 12:30pm.
LaToya Harding
Updated OBR forecasts to be key area of focus
The latest economic forecasts from the Office for Budget Responsibility (OBR) will certainly be on the watchlist today.
Lindsay James, investment strategist at Quilter Investors, said:
“While [the NI] cut would be welcome news to hard-pressed taxpayers, in the context of frozen tax thresholds and other planned tax rises in the years ahead in areas such as stamp duty land tax, the tax burden is still on track to exceed all-time highs. Meanwhile, public services continue to be a source of frustration for much of the electorate.
“A key area of focus today will be the updated OBR forecasts, particularly in light of the recent falls in both inflation and growth. With spending headroom having been created largely due to falling interest rates over the forecast period, this may be an early sign of light at the end of the tunnel.
"Whether this can come in time to limit electoral damage for the Conservatives remains to be seen, but with talk of a May election date, today’s budget seems unlikely to have much impact on existing polls even if, for now at least, there is a small benefit for our wallets.”
LaToya Harding
Ministers arrive in Downing Street for Cabinet meeting
LaToya Harding
Hunt ‘to freeze fuel duty again’ in budget
Jeremy Hunt is to extend a 5p cut in fuel duty for another year at a cost of £5bn, according to reports.
The 5p per litre cut is due to run out in March 2024 and if it were not extended, fuel duty would be set to return to its frozen rate of 57.95p per litre.
Hunt is also expected to scrap an inflation-linked rise in fuel duty — extending a freeze that began in 2011.
It comes as new data from the RAC showed that average price of petrol rose by 4p a litre in February while diesel shot up by nearly 5p.
The RAC said the lower fuel duty reduces the cost of filling up a typical family car by about £3.30.
The FTSE 100 (^FTSE) and European markets are in the green this morning, with London's benchmark index ticking up 0.2% after the open. The more domestically-focused FTSE 250 (^FTMC) was 0.5% higher.
The pound (GBPUSD=X) rose cautiously against the dollar to just above $1.27.
Elsewhere in Germany and France, the DAX (^GDAXI) and CAC (^FCHI) were flat.
LaToya Harding
Labour accuses government of '14 years of economic failure'
Shadow chancellor Rachel Reeves has accused the Tories of overseeing "14 years of economic failure".
She said:
"The Conservatives promised to fix the nation's roof, but instead they have smashed the windows, kicked the door in and are now burning the house down,” she says.
"Taxes are rising, prices are still going up in the shops and we have been hit by recession.
"Nothing the chancellor says or does can undo the economic vandalism of the Conservatives over the past decade."
Today’s Budget should be the final chapter of fourteen years of Tory economic failure.
Taxes are rising, prices are going up in the shops and we have been hit by recession.
Britain is worse off under the Conservatives. Nothing Jeremy Hunt says or does today can change that.
Application for a national insurance number form document by the Department for Work and Pensions in UK issued in 2014 (Ognyan Yosifov)
The Institute for Public Policy Research think tank has calculated that nearly half the NI benefit would go to the richest 20% of households, while just 3% would end up in the pocket of the poorest fifth of us.
Rachael Griffin, tax and financial planning expert, said:
"While a cut in taxes will for some be a needed boost, it hardly turns the dial much considering we are dealing with a historic tax burden at present. However, it will certainly be a crowd pleaser with someone earning £30,000 a year being around £58 better off a month if you also take into account the national insurance cuts in the autumn statement.
"However, many people don’t understand how national insurance works and a cut to income tax would have been easier for all to understand but crucially much more expensive."
Remember when the Tories are talking about "tax cuts” today...
1 - we have highest tax burden since World War 2
2 - A cut in Nat Insurance benefits the wealthiest more than those on average or low wages
The headline from today's budget is expected to be a 2p cut in national insurance.
The cut to national insurance contributions will be the key measure of Hunt's budget after he decided against cutting income tax because of the tight fiscal room for manoeuvre available to him.
The cut will be worth £450 for the average worker and combined with the 2p cut in national insurance announced in November last year, which took effect in January, the latest move will save the average worker a combined £900.
The move is set to cost £10bn.
AJ Bell's director of personal finance, Laura Suter, said:
"The selling point of cutting national insurance is that it is more targeted at workers, as it isn't paid by those over state pension age.
"However, self-employed people are also still waiting for their previously announced cut to NI, due to come in in April, so another one so soon might feel premature."
Donald Trump’s aides have drawn up secret plans to oust the chairman of the Federal Reserve and allow the president to set interest rates, according to reports.
There are benefits to investing in stocks that have reasonable multiples and aren't as dependent on future earnings growth to justify their valuations.
