A stern-looking Jeremy Hunt gave a speech in a rented office opposite the Treasury today saying he had come to puncture myths. Labour has said that if he abolishes National Insurance (as he hints) it would cost £48 billion. Asked about this, he said: ‘It is a lie – I don’t make any bones about it.’ Strong words. But how robust were his own facts? Let’s look at some of his claims.
Hunt claims UK has been a job-making factory
Let’s start with jobs. The president of the CBI described the UK as “a job-creating factory”. That’s because over the last 14 years we have painstakingly built one of the most flexible labour market in Europe.
On the contrary, UK job creation has been abysmal – the only country in Europe to have a lower proportion of people in work now than before the pandemic. Job creation has not just been bad in the UK, but worse than almost anywhere else in the developed world since lockdown.
Hunt claims to be leading a ‘quiet revolution’ on welfare
On welfare reform Labour has said they are against sanctions. That will mean more people on our welfare rolls not less…. But Conservatives know that if businesses are going to find the workers they need without depending on unlimited migration we need to move people off welfare into work… A quiet revolution that will make sure that those who can work do work, and we given help where it’s needed.
On the contrary, the number on out-of-work benefits has been rising and is now as high as the worst periods of our economic history. Which, in the middle or a worker shortage crisis, takes some doing.
Labour vs Tory is a choice between ‘tax cuts or tax rises’
We are prepared to do the hard work to bring taxes back down because we know that doing so will lead to more growth… and that’s why we’ve taken 4p of employees National Insurance saving the average person in work £900 this year. That’s vital help for families after a cost-of-living squeeze.... An ocean of deep blue water that is the difference between more jobs or fewer jobs. More people on welfare or fewer. Tax cuts or tax rises.
We’ll get tax rises no matter who gets in. Deceptively, Hunt doesn’t mention his stealth taxes – freezing the tax thresholds at a time of rampant inflation so as to snare people in higher tax rates. This means tax on wages – Income Tax and National Insurance – is to hit an all-time high however you measure it. In cash terms, real terms and as a percentage of GDP.
A recent Tory claim has been to say that the ‘average’ taxpayer is seeing a tax cut. But average is just one point on the salary scale: Hunt’s reforms will mean more income tax paid by people not earning between £32,000 and £54,000, as the below IFS chart shows.
Hunt says living standards are higher than... 2010
Since 2010, the effective tax paid by someone on an average salary has fallen… the after-tax income of someone on the lowest legally-payable wage has gone up by 35 per cent and we’re not stopping there. If we can afford to go further, responsibly, to reduce the double tax on work this autumn, that is what I will do. Over time, we make no apology for wanting to keep cutting the double tax on work until it’s gone. But only when we can do so without increasing borrowing and without cutting funding for public services of pensions
Time and time again, Hunt uses the ‘today versus 2010’ comparison. It’s bad that he cannot claim things are better than the last election, but the starting point he uses now is four elections ago. Reagan won an election asking ‘are you better off than you were four years ago?’ That Hunt is asking people if they’re better off than 14 years ago really is scraping the bottom of the barrel. Not even Gordon Brown had the audacity to ask, in 2010, if people were better off than they were in 1997.
Hunt claims to have reduced the tax burden by nearly 1 per cent of GDP'
Every single Labour government since the 1970s has increased the tax burden. As we know, global shocks have sometimes forced Conservative governments to do the same, as I did in the Autumn Statement of 22. But Conservative governments never do so by choice. And we have never accepted that such decisions need to be permanent. That is why since that Autumn Statement, decisions in my fiscal events have reduced the tax burden by nearly 1 per cent of GDP compared to what it would have been.
The tax burden has risen relentlessly under Hunt, as the below chart shows. It’s a distortion of the English language to say that tax has been ‘reduced… compared to what it would have been’. What he means to say is tax has ‘risen more slowly’ than was originally planned, but tax has not been reduced.
To accuse an opponent of ‘lying’ – that is to say, knowingly mislead – is as strong an accusation as you can make in British politics. Perhaps Hunt should be less economical with his own actualité next time.
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