This week’s Budget marks one of the final opportunities for the Conservative Party to set out its stall ahead of the looming General Election, which is hurtling towards the voting public at pace. Recent polling will have certainly produced nerves within both CCHQ and No.10. Pair this with disappointing by-election losses across the country and it means that this Budget as important as ever.
The Conservative Party will be desperate for this Spring Budget to shift the dial of public opinion and early indications suggest the Government were mulling over whether to cut income tax or national insurance, opting for the latter by 2 percentage points.
With the UK entering recession and the cost-of-living crisis biting, if the Chancellor is to succeed in cutting national insurance, he must find the correct blend of revenue-raising measures mixed with spending cuts.
While this will be the headline pledge likely to grab public attention, and ultimately be relatively well-received among voters, businesses and organisations will also be keeping an incredibly close eye on what is looking likely to be the Chancellor’s final fiscal event before a General Election.
Health
It has been reported that the Government is considering further taxation on vapes, building on a previous increase in tax on tobacco products last year. This measure would further plans put in place by the Conservative Government to ban disposable vape products by 2025.
Transport and Travel
The travel industry was impacted perhaps more than any during the COVID-19 Pandemic, and the Chancellor looks set to make further alterations to airline fares in order to fund potential tax cuts. It has been reported that business class fares could be subject to an increase in air passenger duties, in a move estimated to raise hundreds of millions for headline grabbing tax cuts.
Housing
One of the key battlegrounds already being established ahead of a General Election is housing policy. The Chancellor is facing calls to slash stamp duty in an attempt to reinvigorate the housing market. There has been a suggestion that Jeremy Hunt was looking at the introduction of 99pc mortgages in order to tackle the issue of declining numbers of first-time buyers. However, this appears to have been dropped following push backs from lenders.
Wider Taxation
The Conservative Party have for a while been mulling over the possibility of Inheritance Tax cuts, however, it would appear that this does not look like a priority for the Chancellor for this Budget and could form part of the manifesto instead. However, the Chancellor does look set to extend the cut in fuel duty by 5p, which has been branded as a £5bn “tax break” for drivers.
Other
With the growing influence of artificial intelligence among the business community, the Chancellor looks set to double funding to the Alan Turing Institute. Reports suggest that the funding will be used to boost research into the deployment of artificial intelligence in healthcare, defence and environmental management.
This year’s Budget will prove incredibly crucial for the electoral chances of the Conservative Party. Against the backdrop of recession and seemingly widespread public disapproval regarding the state of the economy, the Chancellor will look to outline a series of voter-friendly pledges, such as the cut to national insurance in order to bolster the parties hopes at the ballot box.
While it is expected that the national insurance cuts which the Chancellor will brand as worth £900 to the average worker will be well received by workers, it is likely to come at the cost of future spending cuts on public services. Businesses across all sectors will be keeping an eye tomorrow on what further announcements could look like across the economy for employers and employees alike.
For further analysis on what a Labour government could mean for the country click here.
