Published On: Sun, Mar 3rd, 2024

Jeremy Hunt urged to cut income tax or lose grey vote | Politics | News

Jeremy Hunt to cut National Insurance from 12% to 10% from January

Tories have been warned they face a furious backlash from pensioners if they fail to cut income tax in the Budget this week.

Chancellor Jeremy Hunt has lowered his sights and is now edging towards a further reduction in national insurance.

But it will not help the over-65s, after the number paying income tax almost doubled since the Conservatives came to power.

Thousands more retired people have been dragged into income tax for the first time because of the continuing freeze on personal allowances.

Mr Hunt had been considering a 2p cut in income tax, but his dwindling kitty means he may not be able to afford it.

Nearly all planned tax cuts are said to have been shelved and there is talk in the Treasury of a further cut to National Insurance, which is not paid by over-65s.

Angry campaign groups say pensioners have been “ravaged by rampant inflation” and will be hit with “stealth taxes” unless action is taken.

The backtracking has caused ­friction between the Chancellor and PM Rishi Sunak, who is aware older voters will play a major part in deciding the outcome of the next general election.

Dennis Reed, of pensioner campaign group Silver Voices, warned Mr Hunt “won’t win a single older voter back” if cutting National Insurance is “all he does”.

He added: “The National Insurance cuts last autumn did not benefit a single pensioner directly, many of whom are being brought into the tax regime for the first time because of the continuing cruel freeze on personal allowances.”

Pensioners paid £25.2billion in income tax in 2021-22 – the bulk of which came from the levy on pensions. The jump in the number of over-65s now paying has been condemned as the “real tax scandal”.

When the Conservatives came into power around 4.5 million over-65s paid the tax but experts say 9.15 million people are likely to fall into the bracket in 2024-25.

The fiscal outlook has changed dramatically since Christmas as a rise in the cost of government borrowing and lower than expected tax receipts have more than halved the money the Chancellor has to play with.

A former Cabinet member said: “Treasury ministers aren’t just climbing down on tax cuts, they’re at the bottom of the valley, trying to dig a tunnel underneath it. They’re all going round the tea room warning all and sundry not to expect much. I know the game is to talk things down but with this lot that tends to be the reality.”

Former Chancellor George Osborne claims there has “certainly been friction” between Number 10 and Number 11 because the Prime Minister “would like to cut income tax now”.

But he said the Office for Budget Responsibility believes this could stoke inflation and this has been “the source of a lot of conflict”.

Day Three Of The World Economic Forum (WEF) 2024

Chancellor Jeremy Hunt (Image: Getty)

Mr Sunak’s hopes of staying in Downing Street are likely to hinge on hanging on to the support of older voters.

The latest WeThink polling shows 41 per cent of those aged 75-plus and 28 per cent of the 65-74 age group plan to vote Conservative – compared with just 12 per cent of under-40s.

Alan Lees, National Association of Retired Police Officers chief executive, said NI cuts “will do nothing to help pensioners, the very people who have been among the hardest hit by the cost-of-living crisis”.

Mr Lees, whose organisation is part of Later Life Ambitions, a campaign group representing more than 250,000 pensioners, added: “Many of our members have a fixed income and their purchasing power has been ravaged by rampant inflation.

“While the Chancellor hints at tax cuts for some, many pensioners will be hit by his stealth taxes this spring.

“Around 800,000 older people are going to be dragged into paying income tax this April due to the failure to raise thresholds in line with inflation. The number of pensioners paying income tax has doubled since this government came to power in 2010. That is the real tax scandal that will not be addressed in the Budget.”

Joanna Elson, chief executive of Independent Age, also warned “cutting National Insurance won’t put more money in the pockets of older people in poverty who are desperate for help”.

Analysis by Ipsos found older people are more likely to vote, with 74 per cent of people over 65 voting in the 2019 general election and 66 per cent of 55-64s, compared to 47 per cent of those aged 18-24.

And time is running out for the Conservatives to convince voters they should trust them to manage the economy.

Rishi Sunak And Jeremy Hunt

Rishi Sunak And Jeremy Hunt (Image: Getty)

Exclusive polling by WeThink shows nearly 58 per cent of people trust Labour leader Sir Keir Starmer and Shadow Chancellor Rachel Reeves more than Rishi Sunak and Mr Hunt (42 per cent) in this area.

But in a direct message to Sunday Express readers, Chief Secretary to the Treasury Laura Trott said: “We want to make you better off. You work every hour you can to give your family the best life possible. You know what your loved ones need better than anyone. We will pull out the stops to help you give them the best life you can.”

It is reported Mr Sunak has decided to “bet the house” on tax cuts and requests for cash from government departments are being “knocked back”.

And some Tory MPs think the Budget could pave the way for a general election on May 2. One said: “You announce tax cuts but make it clear this is the direction of travel rather. Then you have a clear dividing line with Labour, and you go to the country.”

Earlier this year, it had been expected the Chancellor could have up to £30billion to spend but fiscal headroom has shrunk to £13billion. Initial suggestions of a 2p cut to income tax have died away.

But a spokesman at the Treasury defended the Government’s record, saying: “After providing hundreds of billions of pounds to protect lives and livelihoods throughout the pandemic and Putin’s energy shock, we had to take some difficult decisions.

“However, with inflation more than halved and because of the progress we have made, we have cut taxes for hard-working people, with the average earner paying £1,000 less in tax a year than they otherwise would have done.

“And we have provided the biggest ever cash increase to pension payments, a 10.1 per cent rise.”

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