(Bloomberg) — Prime Minister Rishi Sunak put tax cuts at the center of the Conservative election manifesto as he sought to forge a dividing line with the Labour opposition and turn around his party’s fortunes in national polls ahead of the July 4 general election.
The core policy pursued by the Tories if they win will be a 2 percentage-point cut in the national insurance payroll tax — identical to the measure deployed by Sunak’s chancellor, Jeremy Hunt, at the past two major fiscal events, with little effect on the Conservatives’ standing with the electorate.
Other moves in the manifesto document handed to reporters on Tuesday at Silverstone, where the manifesto was launched, include abolishing the main rate of the payroll tax for self-employed workers by 2029, reiterating an ambition to eliminate national insurance altogether, and a tax guarantee for pensioners. The party said those cuts would be funded by a clampdown on tax avoidance, and measures aimed at slashing the welfare bill by £12 billion a year.
With Keir Starmer’s opposition party enjoying a polling lead in excess of 20 points and projections putting Labour on course to its biggest ever majority, the package of measures announced by Sunak is aimed at hammering home the key Tory message that they’re the party of tax cuts while Labour will raise taxation.
“This election is about building on the progress that we’ve made, delivering a secure future for everyone, where their taxes are cut, their pensions are protected, migration is coming down, and we get to net zero in a more sensible way,” Sunak told BBC TV late on Monday. “In contrast, the Labour Party are asking for a blank check, they won’t tell you what they’re going to spend it on, and they won’t tell you which of your taxes are going to go up to pay for it.”
The problem for Sunak is that first as chancellor and then as prime minister, he’s overseen a rise in the UK tax burden to its highest in 70 years — an increase he was forced to acknowledge in the BBC interview.
Moreover, the ambition to scrap national insurance plays into Labour’s argument that it’s an unfunded £46 billion pledge that would roil the markets in the same way former Tory Prime Minister Liz Truss’s so-called mini-budget did in 2022 — a package of measures that led to her premiership unraveling after 7 disastrous weeks.
Sunak and his ministers, for their part, have persistently said Labour’s policies would add more than £2,000 pounds ($2,545) to the typical household tax bill — a number rejected by Labour, which in any case applies to a four-year period rather than one year.
Labour, like the Tories, has promised not to increase the rates of the Treasury’s three main revenue-raisers, income tax, national insurance and value added tax.
Speaking to reporters before the Tory launch, Starmer doubled down on his assertion that his party wouldn’t raise taxes on working people, and made unfavorable comparisons between the Tories and his Labour predecessor Jeremy Corbyn, who went into the last general election with a costly offer that included nationalizing rail companies and utilities.
“They’re building a Jeremy Corbyn-style manifesto where anything you want can go in there but none of it is costed,” said Starmer — who was a member of the former leader’s top team in 2019.
Other manifesto promises from the Tories, many of them already announced in the early campaign, include:
- A plan to bring back compulsory national service for 18-year-olds
- A guaranteed annual rise in the tax threshold for pensioners to ensure those on the basic state pension never have to pay tax
- A promise not to change the number of council tax bands
- A rise in the earnings threshold at which child benefits are withdrawn
- A cut to stamp duty on property purchases by first-time buyers
- Thirty hours of free childcare a week for working parents from when their child is nine months old
- Increasing defense spending to 2.5% of economic output by 2030
- Reforming the welfare system to save £12 billion a year
- Scrapping university degrees deemed not to add value
- A cap on immigration, and implementation of a government plan to deport asylum-seekers to Rwanda
- Banning the use of mobile phones by children during the school day
- Recruiting 92,000 more nurses, 28,000 more doctors and 8,000 more police officers
- The construction of 1.6 million new homes over the five years of the next Parliament
–With assistance from Helen Chandler-Wilde.
©2024 Bloomberg L.P.