Blackburn Foodbank urge for help as chancellor set to announce National Insurance cut
The Chancellor is widely reported to have decided to cut national insurance rather than the more expensive option of a 2p reduction in income tax.
Jeremy Hunt looks set to unveil a 2p cut to national insurance as he uses the Budget to woo voters ahead of this year's general election.
The Chancellor is widely reported to have decided to cut national insurance rather than the more expensive option of a 2p reduction in income tax.
The move comes as he attempts to both revive the British economy and address an opinion poll deficit which suggests Rishi Sunak's party is on course to be ousted at the election.
Downing Street would not be drawn on the prospect of a cut to national insurance, with the Prime Minister's official spokesman saying: "I'm not going to get drawn on any of the Budget speculation."
Treasury sources also refused to comment ahead of the Chancellor's statement on Wednesday.
But The Times said the cut, worth £450 on average, would come in from April and the decision was taken after Mr Hunt decided against reducing income tax.
It said the decision was taken after the fiscal watchdog the Office for Budget Responsibility downgraded the amount of headroom available for delivering tax cuts or spending commitments within the Chancellor's rule of having debt falling as a share of gross domestic product by 2029.
Gill Fourie is the operations manager for Blackburn Foodbank. Last year they handed out 190,000 meals and are now handing out over 70 food parcels a day.
Gill says money has to be found to support those struggling to get by: "We had an incident the other week where a lady had a new baby and didn't have enough electricity to put on the kettle to make her bottles.
"That was a dreadful situation she just didn't have the money to put any fuel back on the meter.
"We have to guarantee the essentials we have to give those people who can't work enough money to actually have a reasonable life."
She added: "support from the government directly effects what comes in through our door whether that's positively or negatively.
"For example when people had the £20 Universal Credit uplift that was great for people and the people spent that on food.
"The minute that stopped demand went through the rood at our end, it was just unbelievable."
Experts warned that a 2p reduction in national insurance contributions would not by itself be enough to stop the tax burden reaching record levels by the end of this decade.
The Institute for Fiscal Studies said the measure would not prevent taxes rising to around 37% of GDP by 2028-29.
The Resolution Foundation think tank said the combination of another 2p cut on top of the 2p reduction which came into effect in January would be worth up to £1,500 a year for employees.
But, combined with freezes in the thresholds at which national insurance is paid, it will mean that the biggest net beneficiaries are those earning £50,000, who gain a net £1,200, the foundation said.
Those earning £19,000 or less will actually be worse off overall as they lose more from the threshold freeze than they gain from rate cuts.
The Resolution Foundation said the £20 billion of cuts to employee national insurance are set against the context of around £35 billion of tax rises through the six-year personal tax threshold freeze.
Adam Corlett, principal economist at the Resolution Foundation, said: "There are huge questions about whether Britain can really afford £20 billion of tax cuts this year, given the insufficient outlook for public spending and the need to reduce our national debt.
"But the Chancellor has at least opted for a better approach than cutting income tax rates - prioritising workers who face higher tax rates than landlords and pensioners.
"But, while this is going to be a tax-cutting election year, it is sandwiched between significant past and future tax rises, with the Budget likely to only add to the number of tax increases coming in after the election."
The Chancellor attended a pre-Budget audience with the King at Buckingham Palace on Tuesday.
The audience is traditionally a private one but, this time, the King was photographed shaking hands with Mr Hunt in the Private Audience Room of the royal residence.
The King is continuing with his official duties as he is treated for cancer.
Trade minister Greg Hands insisted the UK is seeing "economic better times coming up" and the spring Budget will reflect that, despite warnings of real-terms cuts to NHS funding in the coming financial year.
A responsible Budget would involve giving people "a bit of a tax break this year" and "still keeping a record amount of funding into public services", he told Sky News.
Appearing on ITV's Good Morning Britain, Mr Hands said: "I think we are seeing economic better times coming up and I think the Budget will reflect that."
The introduction of a national insurance cut in April will fuel speculation about a May general election, but Mr Hands suggested that is not on the cards.
The Prime Minister has indicated his "working assumption" is for polling day to be in the second half of 2024.
The latest round of Budget speculation came as economic think tank the Institute for Fiscal Studies (IFS) said an already-strained health service could face a cut worth £2 billion in day-to-day spending in England - the largest reduction since the 1970s.
Mr Hunt on Monday indicated that a more efficient public sector could give him greater scope for tax cuts.
The IFS urged him to deliver more top-up spending for the NHS in Wednesday's announcement, rather than hold back extra money until later in the year as he has done previously.