Britain’s Prime Minister Boris Johnson and Chancellor Rishi Sunak have pledged the “single biggest tax cut in a decade” to help millions of households struggling with the rising cost of living.
The pair issued a unified response to the mounting pressure on the government to do more to help families grappling with soaring food and energy bills — issues caused in part by the global economy coming out of the Covid-19 pandemic and exacerbated by the war in Ukraine.
Inflation has rocketed to a 40-year high of 9.1 per cent and the UK’s central bank predicts it will surpass 11 per cent in the autumn.
Writing in the Sun on Sunday newspaper, Mr Johnson and Mr Sunak said when the National Insurance threshold rises overnight this coming Wednesday from £9,880 ($11,942) to £12,570 it will save 30 million British workers up to £330 a year.
They added that the historic tax cut will amount to £6 billion in value and lift 2.2 million people out of paying “any National Insurance or income tax on their earnings at all”, with “around 70 per cent of British workers” paying less National Insurance.
The tax on earnings and self-employed profits is paid by employees, employers and those who work for their own business. The amount a person pays in National Insurance is determined by a range of factors. including employment status, age, residence status and level of earnings.
The prime minister and the chancellor’s joint op-ed comes months after reports of a rift between the two over how best to respond to the cost-of-living crisis.
In their article, they outlined the billions the Conservative-led government is planning to spend to soften the blow of inflation for people in Britain by also providing relief for council tax bills, fuel duty and energy costs.
“It’s the single biggest tax cut in a decade, worth £6 billion,” they wrote. “It means around 70 per cent of British workers will pay less National Insurance.”
Fears are continuing to mount that the cost-of-living crisis could tip the UK into recession, as defined by two quarters in a row of falling output, as rocketing inflation sees households and businesses rein in spending.
Bank of England Governor Andrew Bailey said on Wednesday that rising inflation will hit Britain harder than any other major economy during the energy crisis and that output is likely to weaken earlier and be more intense than in other nations.
Mr Johnson was last week forced to deny his administration is being “complacent” about the issues facing Britons, and insisted the “cost of freedom” is “always worth paying” amid soaring costs exacerbated by Russia’s invasion of Ukraine.
He said there is a “big chance” to fix unnecessary cost pressures for people and businesses across the UK. Speaking at a press conference at the close of the Nato summit in Madrid on Thursday, Mr Johnson said the “very, very tight labour market” and difficult “balance of our energy mix” add to inflationary pressures.
