All eyes are on Parliament today (Wednesday, March 6) as Chancellor Jeremy Hunt is set to announce the Spring Budget.
The chancellor has been under growing pressure from Tory MPs to lower taxes, which are currently at an historic high – but now it is looking as though higher ones could be on the horizon.
In a recent interview with the BBC's Sunday with Laura Kuenssberg programme, Mr Hunt said the Budget is about "long-term growth”.
He said: “When we look around the world, the economies that are growing fastest, whether it's North America or Asia, tend to be the ones with lower taxes. (It needs to be done by being) responsible and prudent.
"The most unconservative thing I could do would be to cut taxes by increasing borrowing.
"But I do want, where it's possible to do so responsibly, to move towards a lower-tax economy, and I hope to show a path in that direction."
The Conservative ranks are hoping for big tax cuts but the Institute for Fiscal Studies (IFS) urged Hunt to refrain from slashing taxes unless he can explain how he will pay for them.
“Until the Government is willing to provide more detail on its spending plans in a spending review, it should refrain from providing detail on tax cuts,” said IFC economist Martin Mikloš.
Damian Green, the chair of One Nation, instead urged the chancellor to go through with the tax cuts, arguing that the best way to boost the economy was by "cutting taxes and giving people the opportunity to buy their own homes and invest in their future".
This week’s financial announcement will be Hunt’s last budget announcement before the next general election.
What time is the Budget speech?
Jeremy Hunt will deliver his 2024 Spring Budget in the House of Commons on March 6.
The chancellor is set to announce his Budget at 12.30pm. However, it is not known how long the spring Budget will take to deliver in full.
What is the Spring Budget?
The Spring Budget is when the Chancellor outlines the main tax changes for the year ahead and puts final legislative tax changes through.
The Spring Budget and Autumn Statement are different. The latter is made to the House of Commons by the Chancellor of the Exchequer, outlining the state of the economy and the latest predictions by the Office of Budget Responsibility.
How long does the budget speech last?
This can vary quite a lot. However, the budget speech generally lasts for around an hour. For those interested, the record for longest continuous Budget speech is held by William Gladstone, who gave a speech lasting 4 hours and 45 minutes on 18 April 1853.
What can we expect?
It is expected that the Chancellor will focus on income tax in the Budget.
The Times reported that Hunt and Rishi Sunak are "weighing up a significant package of tax cuts", with priority given to income tax and national insurance contributions (NIC). It would follow cuts to NIC already announced in November.
It is also thought that inheritance tax could be cut or scrapped. It is currently charged at 40 per cent on assets or money left to heirs over the tax-free threshold of £325,000. The latest available figures from HMRC show 27,000 estates paid IHT in the year 2020-21, which accounts for less than four per cent of UK deaths that year.
However some, including former Conservative chancellor Norman Lamont, have urged Sunak to ignore calls from his own MPs to ditch inheritance tax.
Jeremy Hunt has also said he will “go to war on immoral Whitehall Waste”. In an interview with GB News, former government minister Anne Widdecombe, in rather Pythonesque fashion, described him as a silly man.
She said; “What the heck have you been doing over the past four-and-a-half years! Why suddenly discover Whitehall waste in the run-up to a general election? Silly man! Does he think anyone’s fooled by that?”
The chancellor has also been warned before the big day to think about his plans deeply, with campaigners saying getting the budget wrong could risk condemning Britain to a second “lost decade” for living standards that would leave working families £1,900 a year worse off.
Recent analysis by the Joseph Rowntree Foundation (JRF) has found a widening gulf between these political demands and the reality facing millions of struggling people. The poverty charity said fixing Britain’s crumbling public realm and tackling sky-high NHS waiting lists are a bigger problem to solve before taxes.
After carrying out an opinion poll of almost 5,000 people across Britain, YouGov found almost three-quarters were “very worried” or “fairly worried” about funding for the NHS and other public services, compared with less than half who were concerned about tax on earnings.
The JRF’s chief economist, Alfie Stirling, said the prospect of a “second lost decade” would come after 14 years of stalling progress to raise living standards, including the failure to increase average workers’ pay substantially above pre-2008 levels after inflation was taken into account.
“Unless policy makers intervene, the 2020s are set to see an unprecedented second lost decade of living standards in a row. As an economy, as a society and as a country, we simply can’t afford this to happen,” he said.
“With the budget just days away, renewed political energy and policy bravery is needed urgently to avert a second period of unthinkable decline.”
