Jeremy Hunt’s March Budget was an exercise in Big State Toryism. It lacked meaningful tax cuts, was full of new spending promises, and was estimated by the Office for Budget Responsibility (OBR) to take the ratio of public spending to GDP to ‘43.4 per cent, its highest sustained level since the 1970s’. But today’s Autumn Statement, the Chancellor told the Commons today, was going to be different. Framing the fiscal update as an ‘Autumn Statement for Growth’, Hunt began his announcement by insisting that ‘our choice is not big government, high spending and high tax because we know that leads to less growth, not more. Instead we reduce debt, cut taxes and reward work’.
What followed was a series of concrete tax cuts for both businesses and workers. Hunt was working with a £27 billion fiscal windfall calculated by the OBR – more than four times the amount he previously thought he’d be working with. He spent nearly all of it on a combination of tax cuts and business relief. The biggest announcements included his decision to make ‘full expensing’ – which allows businesses to write off their investments against their tax bills – permanent. It was hailed as the ‘largest business tax cut in modern British history’, amounting to £9 billion, which plummets the UK to the ‘the lowest headline corporation tax rate in the G7’ – a point that this government will want to emphasise, as Rishi Sunak’s decision to hike corporation tax from 19 per cent to 25 per cent for the largest businesses (and Hunt’s decision to keep it there) remains a huge point of contention within the party.
But the surprise announcement was on National Insurance (NI), which has been cut by two percentage points for workers and simplified for the self-employed: ‘abolishing the compulsory Class 2 charge and cutting Class 4 National Insurance’.