Chancellor Jeremy Hunt has accused Labour of “scaremongering” over his party’s plans to abolish National Insurance contributions.
Mr Hunt announced plans to cut the main rate of employee National Insurance by 2p from 10% to 8% from April 6 as part of his spring Budget earlier this month, adding that ministers eventually wanted to abolish the tax.
Labour has criticised it as a mammoth £46 billion “unfunded” pledge.
Speaking at Prime Minister’s Questions on Wednesday, Labour’s Sir Keir Starmer asked: “You have to wonder what the point is of a Prime Minister who can't lead and a party that can't govern?
“National insurance contributions fund state pensions and the NHS so is the Prime Minister's latest unfunded £46billion promise to scrap national insurance going to be paid for by cuts to state pensions or cuts to the NHS?"
This is just scaremongering. The value of NICs receipts do not determine the NHS budget or the value of pensions. Those decisions are taken entirely separately. If @RachelReevesMP was so concerned about this issue, presumably the Labour Party will be voting against our tax cuts… https://t.co/Wm5JJCHKxw
— Jeremy Hunt (@Jeremy_Hunt) March 13, 2024
He added it "could be 2022 all over again" as he sought to draw comparisons with Liz Truss's disastrous mini-Budget.
"They tried that under the last administration and everybody else is paying the price," he said.
"All we need now is an especially hardy lettuce and it could be 2022 all over again."
However, Mr Hunt accused the opposition of “scaremongering” over the cut, saying: “The value of NICs receipts do not determine the NHS budget or the value of pensions.
“Those decisions are taken entirely separately.”
He asked whether Labour would back a cut in National Insurance due to be voted on by MPs on later Wednesday.
Mr Hunt also said his ambition to scrap National Insurance contributions will not happen in the next Parliament.
Giving evidence to the Treasury Committee on Wednesday, the Chancellor said: "It won't happen in one Parliament, but it's a long-term ambition.
"If we do that, that will be the biggest tax simplification of our lifetimes."
Prime Minister Rishi Sunak has argued the current system is "unnecessarily complex" as employees pay both income tax and national insurance contributions.
