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Jeremy Hunt vowed to ‘help families’ today as he unveils a crucial pre-election Budget with a 2p national insurance cut.

Laying out the Tory pitch to voters, the Chancellor insisted that he believes ‘lower taxes mean higher growth’.

Mr Hunt told a raucous House of Commons he would stick to ‘sound money’ and focus on driving ‘long term’ improvements in productivity.

He declared that fuel duty is being frozen for a 14th year running, while the ‘temporary’ 5p reduction will be extended.

Alcohol duty will also continue to be held for another six months until next February, cancelling a scheduled 3 per cent rise in August. 

He is expected to offer relief to 27million workers by trimming NICs. It will be worth £450 a year to a typical earner, but Mr Hunt is badging it as £900 taken with the previous reduction last Autumn.

But Conservatives have been warning that Mr Hunt must go further than the NICs move to close Labour‘s enormous poll advantage. 

They have been pushing for the Chancellor to risk more expensive income tax reductions instead, arguing that resonates more with the public. 

Think-tanks say curbing NICs will not be enough to prevent taxes reaching a new post-war high in the coming years, with thresholds staying frozen. 

There is also anger at signs Mr Hunt will raise revenues in other areas to fund the action. Vapes and tobacco duty are set to be targeted, while a crackdown on non-dom tax status and second homes being used for holiday lets are also likely.   

However, a government source told MailOnline that the stuttering economy and tight finances gave them no choice. ‘We don’t have any money,’ they said bluntly. 

Laying out the Tory pitch to voters, the Chancellor insisted that he believes 'lower taxes mean higher growth'

Laying out the Tory pitch to voters, the Chancellor insisted that he believes ‘lower taxes mean higher growth’

Jeremy Hunt is braced for one of the biggest moments of his political career with the pre-election Budget today

Jeremy Hunt is braced for one of the biggest moments of his political career with the pre-election Budget today 

A 2p cut to National Insurance contributions will save workers hundreds of pounds a year (figures from Evelyn Partners)

A 2p cut to National Insurance contributions will save workers hundreds of pounds a year (figures from Evelyn Partners)

The OBR's growth forecast is largely unchanged from the Autumn Statement

The OBR’s growth forecast is largely unchanged from the Autumn Statement

Taxes have been heading for a new post-war high - and think-tanks say a NICs cut will not be enough to stop that happening

Taxes have been heading for a new post-war high – and think-tanks say a NICs cut will not be enough to stop that happening

Soaring inflation and increasing tax take has been imposing a miserable squeeze on Brits

Soaring inflation and increasing tax take has been imposing a miserable squeeze on Brits 

The Chancellor's announcements come against a backdrop of the economy slipping into recession in the last half of 2023 - although it is now thought to be growing

The Chancellor’s announcements come against a backdrop of the economy slipping into recession in the last half of 2023 – although it is now thought to be growing

After the ONS adjusted for new population estimates, GDP per person was down 0.6 per cent in Q4 - and has not gone up since the start of 2022

After the ONS adjusted for new population estimates, GDP per person was down 0.6 per cent in Q4 – and has not gone up since the start of 2022

This chart shows how migration has changed over the years to reach a new high in 2022

This chart shows how migration has changed over the years to reach a new high in 2022 

Budget at a glance: Jeremy Hunt’s key announcements

Expected fresh 2p cut to National Insurance

New tax on vapes

Rise in tobacco duty

Expected curbs on ‘non-dom’ tax status

Extension of windfall tax on North Sea oil and gas

Crackdown on tax breaks for holiday lets

Extension of 5p cut in fuel duty

Alcohol duties will remain frozen until February 2025

Threshold for VAT registration for small businesses will go up from 85k to 90k 

£1million towards building a war memorial for Muslims who fought for the UK in past wars 

A new ‘British Isa’ giving investors a £5,000 extra tax-free allowance to ‘encourage more people to invest in UK assets’

Planned growth in day-to-day public spending will be kept at 1 per cent in real terms 

Mr Hunt stressed that his Budget package is fully funded, allowing him to make the reductions ‘permanent’. 

He said: ‘Because of the progress we’ve made because we are delivering on the Prime Minister’s economic priorities we can now help families with permanent cuts in taxation.

‘We do this not just to give help where it is needed in challenging times. But because Conservatives know lower tax means higher growth. And higher growth means more opportunity and more prosperity.’

In what is set to be a key election battleground, the Chancellor contrasted his approach with Labour’s warning that the opposition would ‘risk family finances with new spending that pushes up tax’.

In a reference to Lord Mandelson ‘fat-shaming’ Keir Starmer, Mr Hunt joked that Brits would ‘shed a few pounds’ if Labour gets into power. 

Mr Hunt declared victory on the PM’s pledge to halve inflation, and said the OBR was now predicting CPI will fall below the 2 per cent target in a few months’ time.

He told MPs: ‘When the Prime Minister and I came into office, it was 11 per cent. But the latest figures show it is now 4 per cent, more than meeting our pledge to halve it last year. And today’s forecasts from the OBR show it falling below the 2 per cent target in just a few months’ time, nearly a whole year earlier than forecast in the autumn statement.

‘That did not happen by accident. Whatever the pressures and whatever the politics, a Conservative government, working with the Bank of England, will always put sound money first.’

Mr Hunt said planned growth in day-to-day public spending will be kept at 1 per cent in real terms – after think-tanks warned that the funding for services was not sustainable.

But he insisted the Government will ‘spend it better’ with a new ‘productivity plan’. 

Mr Sunak is also preparing to offer further tax cuts in the election campaign, and is considering reviving a previous pledge to knock 4p off income tax by the end of the decade.

One senior Tory said the PM viewed today’s Budget as a vital stepping stone in reviving the Tories’ economic credibility. 

‘On tax, he believes we need to show, not tell,’ the source said.

Labour claims today’s Budget is designed to clear the way for a May election, although most at Westminster are sceptical of the idea.

Mr Hunt had the traditional photocall with his Treasury team and Red Box in Downing Street this morning, although he suffered an awkward moment as the No11 door failed to open so he could go back inside.

Earlier he warmed up for what will be one of the biggest moments in his political career with a run. 

Economic think-tanks warned the NI cut would not be enough to prevent the overall tax burden rising as a result of huge stealth taxes imposed in the wake of the pandemic. 

The Institute for Fiscal Studies said: ‘Based on forecasts from last autumn, that tax cut would not – by itself – be enough to prevent taxes as a share of GDP from rising to record levels in 2028-29.’

The Resolution Foundation said that people on less than £19,000 a year would be left worse off overall, as the impact of frozen tax thresholds on their income would be greater than the benefit of the cut in NI.

The anticipated NI cut will cost £10billion and benefit 27million workers. The standard rate, which was 12p before November’s autumn statement, has already been cut to 10p and will now fall to 8p next month.

A worker on an average earnings of £35,000 will gain £450 a year. But because the Chancellor cut National Insurance by an identical sum in November, he will present it as a package worth £900 to the average worker.

People earning more than £50,000 a year will gain almost £1,500 a year from the two tax cuts. The Chancellor is expected to introduce a comparable package for the self-employed as he did in the autumn.

But pensioners will miss out because they do not pay National Insurance. Dennis Reed, of the campaign group Silver Voices, said pensioners would be ‘bitterly disappointed’ if they miss out again, particularly as a growing number are being dragged into the tax system by the six-year freeze in thresholds.

Mr Hunt's wife Lucia and children were on hand to see him depart No11 for his big moment in the House of Commons

Mr Hunt’s wife Lucia and children were on hand to see him depart No11 for his big moment in the House of Commons

Mr Hunt and his Treasury team file out for their photoshoot this morning

Mr Hunt and his Treasury team file out for their photoshoot this morning

Extension of 5p cut in fuel duty to ‘save drivers £50 a year’

The Chancellor today announced a freeze on fuel duty for the 14th consecutive year and extended the ‘temporary’ 5p cut in the rate for another 12 months.

In a bid to show he is on the side of ordinary motorists, Jeremy Hunt used his Budget to announce the £5billion package for drivers.

‘This will save the average car driver £50 next year and bring total savings since the 5p cut was introduced to around £250,’ he told MPs.

The 5p cut in fuel duty was introduced by Rishi Sunak when he was Chancellor in 2022 after oil prices were sent soaring by Russia’s invasion of Ukraine.

It was meant to last for only a year but was renewed again last March.

Treasury officials had pushed to scrap it after a drop in pump prices but this idea was vetoed by Mr Hunt as politically untenable.

The Chancellor’s decision means fuel duty will remain at 52.95p per litre for petrol and diesel. Before the March 2022 cut it had been frozen at 57.95p since March 2011.

Mr Hunt has joined a string of recent Tory chancellors in refusing to put fuel duty up in line with inflation. VAT is charged at 20 per cent on top of the total price.

RAC head of policy Simon Williams said: ‘With a general election looming, it would have been a huge surprise for the Chancellor to tamper with the political hot potato that is fuel duty in today’s Budget.

‘It appears the decision of if or when duty will be put back up again has been quietly passed to the next government.

‘But, while it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief as we don’t believe they’ve fully benefited from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’.

‘This has meant fuel prices have been higher than they would otherwise have been.’

In a £5bn package for drivers, fuel duty will be frozen for the 14th consecutive year and the 'temporary' 5p cut in the rate will be extended for another 12 months

In a £5bn package for drivers, fuel duty will be frozen for the 14th consecutive year and the ‘temporary’ 5p cut in the rate will be extended for another 12 months

£360m boost for British manufacturing

Mr Hunt today confirmed a £360million package to boost British manufacturing and research and development projects.

The funding will go towards several companies and projects across the UK’s life sciences and manufacturing sectors.

It includes almost £200million in joint Government and industry funding for aerospace projects to support the development of energy efficient and zero-carbon aircraft technology.

There will also be an almost £73million investment to support the development of electric vehicle technology, and £7.5million to support two pharmaceutical companies who are expanding their manufacturing plants.

Almac, a pharmaceutical company in Northern Ireland produces drugs to treat diseases such as cancer, heart disease and depression.

Ortho Clinical diagnostics in Pencoed, Wales, is expanding its facilities producing testing products used to identify a variety of diseases and conditions

The Chancellor said: ‘We’re sticking with our plan by backing the industries of the future with millions of pounds of investment to make the UK a world leader in manufacturing.’ 

There will almost £73million in joint Government and industry investment to support the development of electric vehicle technology

There will almost £73million in joint Government and industry investment to support the development of electric vehicle technology

Hike to air fares for business class travellers

Mr Hunt announced a hike to air fares for business class travellers as he squeezed the better-off to fund pre-election tax cuts.

The Chancellor put up Air Passenger Duty on business class travel as a revenue-raising move for the Treasury.

It could earn hundreds of millions of pounds more for Mr Hunt and coincided with him making the fresh 2p cut to national insurance.

Air Passenger Duty is charged at three different levels; a reduced rate for economy, a standard rate for business class and a higher rate for private jets.

Prior to today’s changes, those in business class were charged £13 for domestic flights, £26 for flights up to 2,000 miles, £191 for up to 5,500 miles and £200 over that.

Air Passenger Duty already raises £3.8billion a year and so Mr Hunt could now see hundreds of millions of pounds more raked into the Treasury’s coffers.

A small rise in duties had already been scheduled for 1 April.

Mr Hunt’s decision to hike air fares for some travellers is likely to trigger a backlash from airlines.

Ryanair is a critic of Air Passenger Duty, with the airline believing it puts UK airports at an ‘enormous disadvantage’ compared to European competitors.

The Chancellor is also set to be accused of breaking a pledge to the airline industry in September not to impose any new taxes to discourage flying.

A leading industry source told the Telegraph: ‘It’s certainly against the spirit of the promise No 10 made in September not to put up taxes on air travel and has come out of the blue when all the discussion with the Government has been about working together to decarbonise aviation.

‘It will just make the UK more uncompetitive at a time when our airlines are having to compete with EU and US rivals where billions of pounds of support for net zero is available and ultimately will push up prices further for consumers.’

The Chancellor put up Air Passenger Duty on business class travel as a revenue-raising move for the Treasury

The Chancellor put up Air Passenger Duty on business class travel as a revenue-raising move for the Treasury

20 cigarettes set to break £16 barrier and vapes hit

The average price of a packet of 20 cigarettes is set to soar past £16 for the first time after Jeremy Hunt upped tax by x in today’s Budget.

The Chancellor raided smokers and vapers as he sought to recoup some of the money he is paying out in a cut to national insurance.

The Chancellor raided smokers and vapers as he sought to recoup some of the money he is paying out in a cut to national insurance.

The Chancellor raided smokers and vapers as he sought to recoup some of the money he is paying out in a cut to national insurance.

Vapes are being targeted in a bid to reduce the rate of underage vaping. In January shocking stats show a quarter of children have tried puffing on the nicotine-laden gadgets and one-in-10 is a regular user.

Vapes are being targeted in a bid to reduce the rate of underage vaping. In January shocking stats show a quarter of children have tried puffing on the nicotine-laden gadgets and one-in-10 is a regular user.

Before the tax increase the mean cost of a packet of 20 stood at £15.26 in January, according to the Office for National Statistics (ONS).

Vapes are being targeted in a bid to reduce the rate of underage vaping. In January shocking stats show a quarter of children have tried puffing on the nicotine-laden gadgets and one-in-10 is a regular user.

It sparked fears of a future health crisis given the mystery surrounding the long-term safety of e-cigarettes.

Budget tax raid on Airbnbs

Owners of more than 70,000 holidays lets will be bled by the chancellor to pay for his Budget National Insurance cuts, he revealed today.

Jeremy Hunt confirmed that he was cutting back on the financial perks enjoyed by owners of second homes that the rent out in holiday hotspots. 

He estimates that the reduction will bring in £300million for Treasury coffers, but critics have warned that it could hammer areas reliant on tourism for their income by pushing people out of the market. 

Jeremy Hunt confirmed that he was cutting back on the financial perks enjoyed by owners of second homes that the rent out in holiday hotspots like St Ives in Cornwall, pictured.

Jeremy Hunt confirmed that he was cutting back on the financial perks enjoyed by owners of second homes that the rent out in holiday hotspots like St Ives in Cornwall, pictured.

A holiday let is a property that you own in addition to your own home, which you rent out to short-term tenants.

They are taxed as a business, unlike buy-to-let property, which is treated by Revenue & Customs as an investment.

That means owners enjoy far greater tax benefits than buy-to-let landlords. They can deduct more costs, including full mortgage interest, the cost of replacing fixtures and furnishings and ongoing expenses such as cleaning costs and utility bills.

Mr Sunak was flanked by the Chancellor as the Cabinet discussed the package today

Mr Sunak was flanked by the Chancellor as the Cabinet discussed the package today

Jeremy Hunt warmed up for what will be one of the biggest moments in his political career with a 17-mile run earlier this morning

Jeremy Hunt warmed up for what will be one of the biggest moments in his political career with a 17-mile run earlier this morning

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This post first appeared on Daily mail

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