The boss of a leading economic think tank has said that the “black hole” in the UK’s public finances is equivalent to the Conservative Party’s pre-election National Insurance cuts.
Former chancellor Jeremy Hunt cut National Insurance by 2p in the last spring budget before the election, after making the exact same cut in the autumn statement last year.
The combined cuts were expected to save the average earner £900 a year.
At the time, Hunt argued that it would make the tax system fairer and help revive the economy.
In order to pay for the tax reductions, the former government insisted it was looking at further public spending cuts, to be introduced if the Conservatives had won the recent election.
Paul Johnson, director of the Institute for Fiscal Studies, said on Monday that it was “striking” that £20 billion “black hole” is of the same scale as Hunt’s NI cuts.
Johnson told BBC Breakfast: “It is very striking that if this problem is about £20 billion big that is exactly the scale of the National Insurance cuts implemented by Jeremy Hunt just before the election.
“Now, if those cuts were implemented in the knowledge that there was this kind of hole that is not good policy to put it mildly.”
That’s the trap though - it gives the Tories ammunition in future elections to say “Labour promised no tax rises and the first they did in power was raise taxes”.
It’s dirty business - the Tories are essentially using people’s lives in a game of political oneupmanship.
Its also precisely why they refused to guarantee increasing spending on day one.
It was hard work defending this position because we knew there was going to be some pretty bad cockroaches crawling out from the accounting books, but there was a large portion who seemed to feel that anything less than giving them everything was proof they were Tories.
This new Labour Government are beyond playing games. They’ll do what’s best for the country and not their political image… right?
They’re saying on the news that this will be investigated by the OBR and could backfire on the Tories if they find out they have been diddling the books.
You’d hope, as Starmer seems to be pretty committed to public service but the temptation for political point-scoring is a strong one.
I’d love to see them hauled over the coals for this one - pushing through massive tax cuts with a promise to balance the books if they won seems like a really dirty move.