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Good afternoon. The Conservatives are still raising taxes to a record high. However, they are doing so at a slightly slower rate than they were, owing to the Budget.
That’s what Jeremy Hunt is doing underneath the spin. It also presents us with the real choice between Labour and the Conservatives in this year’s election: taxes will rise regardless of who wins it, but they will go up at a slower rate if the Tories win.
I also think it’s a pretty good guess that the question of who pays those higher taxes will change quite a lot, as part of the game of politics is to get the other lot’s voters to pay for things. Both parties will want to talk as if their revenue raisers are levied only on “the rich”: asset-rich retirees will have a worse time of it under Labour, higher working-age earners will have a worse time of it under the Conservatives. Taxes are going to go up regardless.
For different reasons, neither party wants to have that conversation openly. For Rishi Sunak and Jeremy Hunt, that would risk their election campaign devolving into a loud, intra-Tory squabble about whether or not they are abandoning the principles of “proper conservatism” (though there is a risk of that in any case).
For Keir Starmer and Rachel Reeves, an open conversation about tax runs the risk of scaring voters off, thanks to fear of Labour’s tax rises. Hunt’s political aim today was simple — to avoid a Conservative election campaign that forces him and Sunak to talk about the tax rises that they will oversee in the event of a Tory victory, and to try to shunt Labour into talking about its tax rises.
That’s why in a lot of ways the biggest and most significant things Hunt did, politically speaking, was not the 2p cut in national insurance, but the snaffling of Labour’s revenue raisers to pay for it.
Inside Politics is edited by Georgina Quach. Read the previous edition of the newsletter here. Please send gossip, thoughts and feedback to insidepolitics@ft.com
Red red lines
Labour has pledged that the Conservatives’ spending plans are its baseline, and has committed to a handful of additional spending commitments — on breakfast clubs, the NHS and the like — paid for by extending the windfall tax on the energy companies and by scrapping the non-domiciles tax regime.
These tax rises met three Labour objectives: they allowed Starmer’s team to say it would do things differently from the Conservatives, they enabled the party to say it was “fiscally credible” because it could show how its spending commitments would be met, and they were popular tax rises that most voters weren’t going to feel directly.
Now Hunt has taken them off the table by extending the government’s windfall tax to 2029 — the end of the next parliament — and scrapping the “non-dom” system himself. Labour now needs to find the extra money to pay for its various goodies from somewhere else without tripping into an enervating row over tax-and-spend (double-triple-quadruple VAT on private schools, perhaps?)
The other subplot is, as readers with good memories will recall, Labour is busy working out what the precise contents of its manifesto will be. That will presumably also include a handful of carefully chosen “retail offers” in terms of public spending, presumably also paid for (at least in theory) by popular taxes that most people won’t pay. Those conversations will become more fraught now because, in addition to finding new ways to fund new policies, Labour now needs to find new sources of funding for its existing commitments.
We’ll have more to say about the policy choices Hunt made in this Budget in tomorrow’s newsletter. But in terms of assessing how it has landed politically, the potential game-changer here isn’t anything that Hunt has “given away” in terms of tax cuts: they did not move the dial with voters last time and it is unlikely that they will do so this time. The important variable is whether his use of Labour’s revenue raisers to do so forces the Labour party into an uncomfortable position on tax-and-spend.
Below is the FT’s live-updating UK poll-of-polls, which combines voting intention surveys published by major British pollsters. Visit the FT poll-tracker page to discover our methodology and explore polling data by demographic including age, gender, region and more.