Touchbutton 94 – ‘Stop Making Sense’ – An Entirely Predictable Autumn Statement
Wednesday’s Autumn Statement by the Chancellor of the Exchequer, Jeremy Hunt, contained little of note in terms of personal tax apart from the cut to the standard rate of employees’ National Insurance Contributions (‘NIC’) from 12% to 10%, with effect from 6 January 2024.
As well as some ‘tinkering’ with Individual Savings Accounts (‘ISAs’), the government is launching a consultation on a pension ‘lifetime provider model’. It was also confirmed that, in the Autumn Finance Bill, the government will legislate to remove the Lifetime Allowance with effect from 6 April 2024 and will, amongst other matters, clarify the taxation treatment of lump sums and lump sum death benefits.
“… any cut in NIC is likely to be more than offset by so-called ‘fiscal drag’.”
As has been pointed out in the media, because of the freezing of tax thresholds between 2022/23 and 2028/29, any cut in NIC is likely to be more than offset by so-called ‘fiscal drag’. Indeed, some speculate that the reason for timing the NIC rate cut for 6 January (instead of 6 April) is so that voters feel immediately better off before the beginning of the new tax year, when the effect of frozen income tax allowances will then largely reverse the position.
This year saw the death of Lord Lawson of Blaby, formerly Nigel Lawson, who became Chancellor of the Exchequer in 1983, a mere 40 years ago. Lawson presided over a period of huge reductions in personal taxation and significant ‘supply side’ reforms.
The current Chancellor made much of his ‘supply side’ measures on Wednesday; however, there was little of the extravagance of Lawson or indeed the conviction of a government that was brimming with ideas.
“… does the timing of the NIC cut augur a May election following hard on the heels of a tax cutting Spring Budget?”
We will now have to wait for the Spring Budget in March 2024 to see if there is any way the Conservatives can salvage their credibility as a real tax cutting, small-state government, perhaps by reforming or even abolishing Inheritance Tax. More interestingly, does the timing of the NIC cut augur a May election following hard on the heels of a tax cutting Spring Budget?
Shortly after the aforementioned Nigel Lawson’s first Budget in March 1984, the American rock band ‘Talking Heads’ showed their concert film ‘Stop Making Sense’ (from which the title of this Touchbutton is taken) at the San Francisco Film Festival. The film featured a live performance of, amongst other songs, ‘Once in a Lifetime’, during which the lead singer David Byrne, when considering where life has led him, intones, ‘How did I get here?’.
One wonders how many on Chancellor Hunt’s side of the Commons chamber are asking similar questions of their period in government.
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