Hunt ‘repeating Truss’s errors with £46bn unfunded tax proposal’ to scrap national insurance, says Starmer – UK politics live | Politics

Rishi Sunak would be “absolutely nuts” to call a general election in May, the former Tory chancellor George Osborne has said.

Speaking on his Political Currency podcast, which he co-hosts with Ed Balls, Osborne said that No 10 has thought about having a May election.

A lot of Tory MP were in favour of the idea “because they think things will only get worse”, he said.

But Osborne said he personally thought going early would be a mistake.

The centre has thought about a May election but I think it would be absolutely nuts. They are 26 points behind in the opinion polls. You do not call a general election when you’re 26 points behind and you still have nine months left of your mandate to run.

If I was Sunak, I wouldn’t be ruling out an election in January 2025. You want to give yourself maximum room for manoeuvre.

Andrew Bowie, the energy minister, is not being sacked despite posting a message on X yesterday saying the extension of the windfall tax on energy companies was “deeply disturbing”.

In normal circumstances a minister who criticised government policy in public in this way would be expected to resign. But, at the No 10 lobby briefing, the PM’s spokesperson said that Rishi Sunak retained confidence in Bowie.

The spokesperson said:

[Bowie has] obviously has since clarified his position, he’s spoken to the chancellor about his views and he’s been clear that he supports the budget.

The spokesperson was referring to this post on X put out by Bowie last night.

I’ve spoken to the Chancellor. He understands the importance of the EPL [energy profits levy] issue in the North East.

The fact is only the Conservatives support our Oil and Gas sector. Thats why, for example, we are alone in retaining the capital gains allowances. So now we need get on and deliver.

Bowie seems to have been allowed some leeway to speak out because he is MP for West Aberdeenshire and Kincardine in the north-east of Scotland, where there are strong concerns that an extension of the windfall tax might jeopardise jobs in the oil and gas industries. Douglas Ross, the Scottish Conservative leader, has said that he will not vote for this policy when the Commons has to approve the budget.

Labour has said Bowie should have to resign over this.

Labour’s Anas Sarwar criticises SNP’s health record during FMQs at Holyrood

Severin Carrell

The Scottish National party government in Edinburgh is under further attack by its critics who accuse ministers of passing performative acts of parliament which they then fail to properly pay for, this time over NHS waiting lists.

Last month the housing charity Shelter Scotland accused Humza Yousaf, the first minister, of “gaslighting” voters by introducing progressive-seeming legal rights to housing but then cutting the funding councils needed to deliver them. Scottish homelessness rates hit record levels last year, despite a legal guarantee to housing.

At first minister’s questions earlier today Anas Sarwar, the Scottish Labour leader, said that under another Scottish law, this time the Patient Rights (Treatment Time Guarantee) (Scotland) Regulations 2012, Yousaf and his colleagues had technically broken that law 680,000 times because 680,000 patients had not had treatment within the 12-week target specified.

Listing every recent health secretary, Sarwar said:

Humza Yousaf might try and blame the pandemic, but this law was broken over 320,000 times before covid.

Shona Robison broke the law 158,000 times.

Michael Matheson broke the law 184,000 times.

And Humza Yousaf broke the law 235,000 times.

And since he published his so-called NHS recovery plan, the SNP have broken the law 306,735 times.

Yousaf protested that the pandemic had hit every health service, and repeated his apology to any patient who was not seen or treated in time.

But this theme will reoccur in the run-up to the general election: the SNP’s opponents plan to make the contest in Scotland in large part a referendum on the SNP’s record in government, even though it is not actually up for re-election.

Rishi Sunak had defended the use of taxpayers’ money to make a payment of £15,000 for damages to an academic libelled by Michelle Donelan, the science secretary.

The prime minister claimed that it was right for the government to cover the cost to the damages because the legal dispute arose as a result of Donelan doing her job.

But Keir Starmer has described this as “totally insulting”, and insisted that as prime minister he would never authorise a payment of this kind.

In October last year Donelan suggested that Prof Kate Sang, of Heriot-Watt university in Edinburgh was a support of Hamas. She made the suggestion in a letter to UK Research and Innovation (UKRI), posted on X, saying it should cut links with Sang. On Tuesday Donelan retracted her suggestion, and it was subsequently revealed that her department has paid £15,000 in damages.

Asked to explain why the taxpayer should pay for the minister’s mistake, Sunak told broadcasters today:

Obviously you will understand I’ve been focused on the Budget, but my understanding of this is that Michelle raised some concerns about some articles that had been shared talking about what happened on October 7.

I think subsequently to that, those thoughts I think have been clarified and Michelle has withdrawn those concerns.

With regard to the settlement, it is a long-standing convention stretching back many years, over different governments of all different parties, including Labour, that the government will fund those legal disputes when it relates to government ministers doing their work.

But Starmer said that getting the taxpayer to pay for a libel committed by a minister should not be allowed. In a separate clip for broadcasters, he said:

I think most people watching this will be aghast.

The government is telling them every day that they can’t do any more to help them. People are really struggling to pay their bills, and the government says ‘We can’t afford to help you anymore’. People know that public services are crumbling.

And then you’ve got a minister who says something she shouldn’t have said, then has to pick up a legal action and pay damages and costs, and then says ‘The taxpayer is going to pay for that’.

Totally insulting. We need a change.

I’ll tell you something else – if we’re privileged enough to come into power and have a Labour government, we will never allow that sort of thing to happen. That will be history.

During business questions in the Commons, Penny Mordaunt, the leader of the house, defended Donelan on the grounds that she did not take a severance payment after she resigned as eductation secretary in 2022, even though she was entitled to one. Mordaunt said:

When [Donelan] was entitled to redundancy payments from being a secretary of state, which was £16,000, she did not take that and handed it back to the department, because it was the right thing to do. I would just remind people of that and I think that speaks volumes about her character and how much she values the fact that it is taxpayers’ money that we are talking about.

Mordaunt did not remind MPs that Donelan only spent about 36 hours as education secretary. She was appointed by Boris Johnson, as his government was falling apart, but quickly decided she did not want to serve under him.

Government sources have suggested that one reason why the department felt obliged to fund the settlement is that Donelan received official legal advice about her letter, and her tweet, before it was published.

In an interview with Sky News last night Jeremy Hunt, the chancellor, played down the prospects of the election being held in May. Asked if the budget was “the last throw of the dice” before the election, he replied: “Absolutely not.” Asked if the government was still planning for an autumn election, he said that was still “the working assumption” (which is what Rishi Sunak himself said in January), but he stressed that the timing of the election was a matter for the PM.

Sunak himself was interviewed by Jeremy Vine on Radio 2 within the last hour, and, when asked about the timing of the election, he chose not to repeat the line about autumn being the “working assumption”.

When Vine put it to him that there are reports saying he is considering an election in May, Sunak laughed, and said he would not be saying anything about that.

Asked if he still favoured holding it in the second half of the year, Sunak just said that what mattered was the choice facing voters.

The Institute for Fiscal Studies always finds at least some aspects of a budget to criticise, but its verdict on yesterday’s is a lot more withering than usual. Here are the main points from the summary of its position from Paul Johnson, the IFS’s director. Johnson delivered this at a news conference this morning.

Talk of abolishing national insurance does not look realistic. Of course, the chancellor is only talking about the part paid by employees (and the self-employed) not the much bigger part paid by employers. But this pledge to cut taxes by more than £40bn goes in the same bucket as pledges to increase defence spending – not worth the paper its written on unless accompanied by some sense of how it will be afforded.

I’ve said it before, and I’ll say it again. Tax has risen to a higher fraction of national income than it has ever been in my lifetime, and I don’t expect it to return to its previous level for the rest of my lifetime.

Johnson is 57.

This chart from the OBR’s report yesterday shows how tax as a proportion of GDP has risen during Johnson’s lifetime.

The combination of high debt interest payments and low forecast nominal growth means that the next parliament could well prove to be the most difficult of any in 80 years for a chancellor wanting to bring debt down. Even stabilising debt as a fraction of national income is likely to mean some eye wateringly tough choices – and we are talking tens of billions of pounds worth of tough choices – on tax and spending.

Remarkably [Jeremy] Hunt stuck with the claim that he wants defence spending to rise to 2.5% of national income “as soon as economic conditional allow”. Well, economic conditions allowed a £10 billion cut in NICs this year. So they could have allowed a £10 billion increase in defence spending instead. That would have just about met the target. Actions speak louder than words.

On his figures, debt is rising slowly to 2027-28 before falling by a minuscule amount as a share of national income in the following year. But that requires him to assume a whole series of unlikely, or undesirable things.

Perhaps unlikeliest of all is that the supposedly temporary one-year 5p cut on fuel duty originally put in place in April 2022 will expire in a year’s time, and that rates of fuel duties will then rise in line with inflation, despite freezing them yesterday for the 15th year in a row. Perhaps least desirable is that investment spending will fall by £18bn a year in real terms. Somewhere between the two lies the effective promise that day-to-day spending on a range of public services outside of health, defence and education, will fall by something like £20bn. Maybe that is possible, but keeping to these plans would require some staggeringly hard choices which the government has not been willing to lay out. Indeed, we heard yesterday that the next spending review, in which these choices will have to be announced, will rather conveniently not happen until after the election.

One only has to look at the scale of NHS waiting lists, the number of local authorities at or near bankruptcy, the backlogs in the justice system, the long-term cuts to university funding, the struggles of the social care system, to wonder where these cuts will really, credibly come from.

If I am sceptical about Mr Hunt’s ability to stick to his current spending plans, I am at least that sceptical that Rachel Reeves will preside over deep cuts in public service spending …

Government and opposition are joining in a conspiracy of silence in not acknowledging the scale of the choices and trade-offs that will face us after the election. They, and we, could be in for a rude awakening when those choices become unavoidable.

• He said higher rate tax payers could gain up to £1,500, and people on average earnings up to £1,000 a year, from the reductions in national insurance in the budget and last year’s autumn statement.

• He said pensioners would be “substantial net losers” from the budget. Confirming an assessment made by the Resolution Foundation (see 10.24am), Johnson said:

While many workers will be better off as a result of tax changes over this parliament, pensioners will be substantial net losers. Well over 60 per cent of pensioners now pay income tax. Income tax changes will leave most of them £650 a year worse off by 2027, and over £3,000 a year worse off if they are higher rate tax payers.

Richard Partington has more on the IFS’s analysis here.

Electoral Commission records show Hunt has now donated £123,000 to Tory association in his constituency

Aletha Adu

Jeremy Hunt has donated more money to his constituency Conservative party in the last four months to boost his chances of re-election, according to fresh official records.

The chancellor donated an extra £18,084 last November, Electoral Commission records show, pushing the total number of cash he has spent since the last general election, to £123,345.

Earlier this week the Guardian revealed he had given £105,261 to the south west Surrey Conservative association over the last five years, from the last general election held in December 2019 until June 2023.

The most recent accounts for Hunt’s local association have warned that its “balance sheet is at a less than satisfactory level”. A note stated that members’ annual subscriptions were due to increase this year.

Hunt’s Godalming and Ash seat is a key target for the Liberal Democrats.

Polling by Savanta shows the Lib dems are on course to take the “blue wall” constituency, which would make Hunt the first chancellor in modern times to lose his seat in the Commons.

Over the last week, Hunt has repeatedly insisted he hopes he will “carry on serving” his voters, and noted: “I hope to be the chancellor after the election”.

When asked whether he spent £105k from February 2021 to June 2023 over fears of losing his seat, Hunt told Sky News yesterday:

I put that money in mainly because during the pandemic it was not possible to do fundraising in the normal way. I’ve got a brilliant team in my constituency and we do some fantastic local campaigning and I wanted that to continue despite the fact that we couldn’t fundraise. But have I (got) a tough fight against the Lib Dems? Absolutely. And I’ve never taken that for granted.

Keir Starmer has accused Jeremy Hunt of repeating the budget mistakes made by Liz Truss during her disastrous premiership.

In comments on the budget during a visit to a building site this morning, Starmer focused on Hunt’s proposal to abolish employees’ national insurance over time, saying that this was a bigger unfunded tax promise than those in Truss’s mini-budget. (See 9.28am.)

He also said that it was “humiliating” for Hunt to have to announce the abolition of non-dom status, a longstanding Labour proposal that Starmer wanted to use to fund some of his policies, including more investment in the NHS.

Starmer said:

How humiliating was that for the government yesterday?

We’ve argued for years that they should get rid of the non-dom tax status, they’ve resisted that. And now, completely out of ideas, the only decent policy they’ve got is the one that they’ve lifted from us.

Obviously we will keep our commitment to the NHS, so important it is. We’ll go through all of the numbers and we’ll be absolutely clear nothing in our manifesto will be unfunded and uncosted. That is an iron rule for the Labour party.

Contrast that with the government, where, yesterday, at the end of the budget, the chancellor made a staggering £46bn unfunded commitment to abolish national insurance.

That’s bigger than Liz Truss’s commitment, so they’ve learned absolutely nothing.

The Labour claim overlooks the fact that Truss’s unfunded tax cuts triggered financial panic because they were specific measures which would have been implemented if they had not been swiftly reversed. Hunt was also talking about a massive tax cut, without saying how it might be funded, but he made it clear that this was just a long-term aspiration, and not something that at present has any impact on government finances.

Amol Rajan may have been understating the problems facing Britain in his question to Jeremy Hunt this morning (see 10.33am), if the Institute for Fiscal Studies’s assessment is anything to go by.

This is how Paul Johnson, the IFS director, opened his speech at the IFS presentation where its experts have been explaining the significance of what was announced yesterday.

Nothing that Jeremy Hunt did yesterday, nor anything the OBR said, changes anything very significantly. Which is a shame. Because that means we are still:

-heading for a parliament in which people will on average be worse off at the end than at the start,

-looking at a debt to GDP ratio that is at its highest level in 70 years and is showing no signs of falling;

-facing debt interest payments at close to all time highs;

-seeing worrying increases in the number of individuals moving onto health and disability related benefits, bringing huge challenges for those households and rising costs for the public purse;

-(despite the genuinely significant cuts in NICs) stuck with a situation where tax revenues will have risen by a record amount as a share of national income over this parliament and still heading towards UK record levels;

-implicitly planning on big cuts in public investment spending overall and cuts to many areas of day-to-day spending on public services despite very obvious signs of strain in many areas.

All of that was true on Tuesday, and all of it remains true today. In all likelihood it will still be true come the general election.

I will post more from the IFS assessment shortly.

Jeremy Hunt has accused a Today presenter of being “not worthy of the BBC” after he suggested the budget did not do enough to revive Britain’s “stagnant” economy.

Towards the end of what was otherwise a relatively good-tempered interview, Amol Rajan said:

This might be, and you’ll say you don’t want it to be, one of your last big acts in politics. Do you really think you’ve read the moment?

This is a country ravaged by economic shocks, at best drifting, at worse, stagnant. We all know about its potential, but we’ve had seven quarters of falling GDP per head, that’s been revised downwards.

We’re hooked on foreign labour, the birth rate is collapsing. Many public services are creaking, councils are going bust.

Those are facts, has your budget really come even close to meeting the scale of the challenges this country faces?

In response, Hunt said:

I think the overall characterisation that you’ve just given of the British economy is unworthy of the BBC.

Rajan insisted that there was “no such thing as ‘the BBC’”, because so many different people worked there, and he said he was “just putting to you facts about this country”. But Hunt replied: “It’s unworthy of you Amol.”

The Resolution Foundation has described pensioners as the the biggest losers from the budget.

In its analysis, it says:

Looking beyond just employees, though, personal taxes are still going up significantly, with threshold freezes exceeding value of NI rate cuts by £20bn (£41bn versus £21bn). What’s going on? £8bn is being raised by the freezes to thresholds for employer NI, which in time should feed through into lower pay levels for employees. And there is a big group of losers: pensioners, who are already exempt from NI but affected by freezes to income tax thresholds. All 8 million taxpaying pensioners will see their taxes increase, by an average of £1,000 – an £8bn collective hit. This approach is justified with tax cuts focused on working-age employees and the self-employed, who currently pay higher rates of tax than pensioners or landlords, but it is a staggering turnaround from the approach of Conservative governments since 2010, who have generally focused support on pensioners.

Commenting on the figures, Sarah Olney, the Lib Dem Treasury spokesperson, said:

This Conservative government has shown their true colours, pensioners are not their priority. They would rather cut taxes for the big banks than look after those who have given so much for so long to our society.

But Jeremy Hunt rejected this claim. He told Sky News:

We’ve done an enormous amount for pensioners. This government introduced the triple lock … we have really prioritised pensioners.

Household incomes are on course to fall for the first time over the course of a parliament despite Jeremy Hunt’s national insurance cuts, the Resolution Foundation thinktank has said in its assessment of the budget. Phillip Inman has the story.

Jeremy Hunt has conceded that the Conservative will not be able to abolish employees’ national insurance, as he has said he would like to do (see 9.28am), any time soon,

Asked when this might happen, he told Times Radio:

That’s a huge job. [National insurance] raises an enormous amount of money. And I don’t think it’s realistic to say that’s going to happen any time soon. But I do want to end the unfairness of a system where the income you get from work is taxed twice through income tax and national insurance.

The Resolution Foundation thinktank has published its assessment of the budget. At a news conference, James Smith, the RF’s research director, said Jeremy Hunt’s £20bn national insurance giveaway was funded by planned cuts to public spending that were so implausible they amounted to “fiscal fiction”. He said:

The government are pencilling overall day-to-day spending numbers beyond the end of the spending review, from 2025-26 onwards.

And if you take out what the government has said it will guarantee in terms of health, defence, education, then you end up with those unprotected departments … with really, really big cuts. So this is something like three-quarters of the intensity of the cuts that we got from 2010 and it’s getting on for £20bn. So you can think of tax cuts, the £20bn national insurance giveaway that we’ve had since autumn has been essentially funded by these fiscal fiction spending cuts that are pencilled in.

Smith also said the UK has had almost two decades without real-terms wage growth. He said:

We don’t get back to the pre-2008 level of real wages until 2026. So that’s nearly two lost decades of real wage growth. So that’s an incredibly bleak backdrop in terms of living standards.

If you look at overall income, this is going to be the first parliament, which we have comparable income data for, where income is actually falling in real household disposable income terms.

Good morning. If a budget is going to unravel, that often starts to happen on day two, after the initial headlines have gone and when the experts start to unpack what it really means. So far, there is not much sign of that happening, because Jeremy Hunt did not announce much yesterday that had not been well trailed in advance. But the reaction in Tory circles is a bit flat. And Labour has leapt on one of the more half-hearted proposals in the budget to make the case that Hunt is being even more irresponsible than Liz Truss.

Hunt said yesterday the Tories had a “long-term ambition” to get rid of employees’ national insurance. And in an email to Tory supporters last night Hunt said (bold text from the original):

This time, we’ve cut national insurance AGAIN – from 10% to 8%.

In total, across both tax cuts, that means the average British worker keeps £900 more a year.

But there’s further to go. I’d like to end the unfairness where people in work are paying tax twice on their earnings.

We want a simpler, fairer tax system where you only pay tax once.

If we stick with our plan that’s working, we’ll be able to make progress towards that goal in the next parliament.

Labour says this would cost £46bn. It has sent out this briefing with the costings.

It would cost many tens of billions to abolish NICs [national insurance contributions] entirely:

£39.96bn to abolish employee NICs main rate, going from 8p to 0p

£2.28bn to abolish self-employed NICs, going from a 6p rate to 0p

£2.9bn to abolish employee NICs additional rate, going from 2p to 0p

£0.54bn to abolish self-employed NICs additional rate, going from 2p to 0p

That means that in total Jeremy Hunt wants to deliver £46bn of unfunded tax cuts

That is £1bn more than the £45bn of unfunded tax cuts in the disastrous Truss mini-budget.

Rachel Reeves, the shadow chancellor, has been giving interviews this morning. She said that Labour is constantly being challenged to explain how it will fund its pledges (she admitted she now has to find money to pay for the proposals that would have been funded by the abolition of non-dom status), but Hunt now had to explain how he would fund a £46bn cut. She told the Today programme:

You just asked me how I’m going to find £2.1bn, and I will do that.

But the government yesterday suggested that are going to cut national insurance entirely at a cost of £46bn pounds a year. That is a bigger unfunded commitment to tax cuts than even Liz Truss and Kwasi Kwarteng tried.

So the question to the chancellor is, is this a real promise, is this a real commitment? And, if so, how is that going to be funded? I want taxes on working people to come down. But I’m never going to make a commitment without saying where the money is going to come from.

Hunt has also been giving interviews this morning. I will post more from both interview rounds shortly.

Here is the agenda for the day.

9am: The Resolution Foundation publishes its budget analysis at a press conference.

9.30am: Kemi Badenoch, the business secretary, takes questions in the Commons.

10.30am: The Institute for Fiscal Studies publishes its budget analysis at a press conference.

Morning: Rishi Sunak takes part in a Q&A in a pub in Yorkshire.

Morning: Keir Starmer and Rachel Reeves visit a building site in London.

11.30am: Downing Street holds a lobby briefing.

After 11.30am: MPs resume their debate on the budget.

After 12pm: Rishi Sunak is interviewed on Radio 2’s Jeremy Vine show.

1pm: Badenoch gives a speech at the Global Trade conference.

Also, David Cameron, the foreign secretary, is visiting Berlin.

If you want to contact me, do try the “send us a message” feature. You’ll see it just below the byline – on the left of the screen, if you are reading on a laptop or a desktop. This is for people who want to message me directly. I find it very useful when people message to point out errors (even typos – no mistake is too small to correct). Often I find your questions very interesting, too. I can’t promise to reply to them all, but I will try to reply to as many as I can, either in the comments below the line; privately (if you leave an email address and that seems more appropriate); or in the main blog, if I think it is a topic of wide interest.