Hunt defies public services alarm with pre-election budget tax cuts

Jeremy Hunt will use his final budget before the election to promise voters lower tax and higher growth – with a 2p cut in national insurance to be announced today – even at the expense of public services.

- Kiran Stacey, Pippa Crerar, Phillip Inman

Sources said yesterday that the chancellor had decided to reduce national insurance for the second time in four months, from 10% to 8%, having defi ed calls from some in Downing Street and across the party for a more expensive pre-election income tax reduction.

Hunt will frame the move as a push for growth, opportunity and prosperity, having brushed off concerns among many Tories that cutting national insurance will not be enough to overturn their 20-point deficit to Labour in the polls. But he is likely to impose strict spending limits – to take effect after the election – to help pay for the tax cuts, causing some in his party to worry that voters will punish them for cutting services rather than rewarding them for lowering taxes.

Hunt will say today: “Conservatives know that lower tax means higher growth. And higher growth means more opportunity and more prosperity. But if we want that growth to lead to higher wages and higher living standards for every family in every corner of the country, it cannot come from unlimited migration. It can only come by building a high-wage, high-skill economy. Not just higher GDP, but higher GDP per head.”