Analysis
The budget: what Jeremy Hunt needs to do – and
the pitfalls he must avoid
Toby Helm
Financial experts give their advice on the best course
of action for the chancellor to take on Wednesday
Sun 3 Mar 2024 07.00 GMT
Ben Zaranko
Senior research economist,
Institute for Fiscal Studies
What should the chancellor do If he’s absolutely
determined to cut taxes, Jeremy Hunt should focus on changes that improve the
UK’s growth prospects. Rather than cut headline rates of income tax or national
insurance, he’d get more bang for his buck if he cut or scrapped stamp duties
on house and share purchases instead.
What he should not do The key thing the chancellor should avoid is
writing another chapter of his fiscal fiction. He should avoid the temptation
to pencil in additional unspecified spending cuts in the next parliament (cuts
that, in all likelihood, won’t be deliverable without some quite radical cuts
to what the state is expected to deliver) in order to “pay for” definite tax
cuts today.
Tom Clougherty
Executive director,
Institute of Economic Affairs
Should Given fiscal headroom, the chancellor should
prioritise reforms that will have a lasting economic impact over pre-election
giveaways. Some technical changes to corporation tax and business rates would
help, but abolishing distortionary and destructive stamp duties – or cutting
them as much as possible – should top the wish list.
Should not Hunt should not hand his successor a budgetary
black hole. Keeping public spending flat in real, per capita terms is fine –
but it must be accompanied by reform. Starving public services of resources
while doing nothing to make them more productive is a key failure of the last
decade.
James Smith
Research director,
Resolution Foundation
Should The chancellor should show he’s not all about
short-term giveaways by addressing the “fiscal fictions” in his post-election
spending plans. He should announce a one-year spending review before the summer
so government departments don’t go through an election without knowing the
budgets for public services just a few months ahead. If he is going to cut
taxes, it should improve the tax system – abolishing the high-income child
benefit charge that leaves parents with high tax rates – and not raising stamp
duty next year.
Should not He shouldn’t double down on post-election
spending cuts by pencilling in even larger reductions and blowing all his
wriggle room on tax cuts. Expensive and poorly targeted income tax cuts and
wasteful inheritance tax cuts should be avoided. Cutting national insurance is
better targeted at workers and can be used to reduce some of the biggest
distortions in the tax system.
Katie Schmuecker
Principal policy adviser,
Joseph Rowntree Foundation
Should He should deliver lasting solutions that
address the rise in deep poverty spanning two decades. We must build a system
that’s there for all of us when we fall on hard times. Universal credit needs
an “essentials guarantee” so that, at a minimum, people can always afford
life’s essentials.
Should not: The chancellor shouldn’t assume the cost of
living crisis is over. Millions are going without essentials, and support is
coming to an end. It’s vital the household support fund (HSF) isn’t scrapped so
that councils and devolved administrations can avoid scaling back cash payments
and support for people in crisis.
Mark Littlewood
Director, Popular Conservatism (PopCon)
Should Exercise some meaningful spending constraint
to pave the way for the tax cuts he yearns for but appears incapable of
delivering. Instead of highlighting one or two tiny tax cuts which are trumped
by less transparent tax rises, he should commit to an overall reduction in the
tax burden.
Should not He shouldn’t praise the Office for Budget
Responsibility’s [OBR] “amazing work” or be bound by its forecasts, which tend
to be out by £500m a year or more. The OBR’s chair, Richard Hughes, appears to
have more control over fiscal policy than the government itself. Some
meaningful effort need to be made to wrestle this back.
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