Tax cuts will push thousands into poverty, think tanks warn ahead of spring budget

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Thousands of families will be pushed into poverty if the Chancellor cuts national insurance in the spring Budget, think tanks have warned.

On Wednesday, Jeremy Hunt will unveil his final budget ahead of the next general election, where he is widely expected to cut taxes in a last-ditch bid to win back voters.

Mr. Hunt hinted that a further National Insurance tax cut could be on the cards, telling Sky News that his latest contribution cut in November's Autumn Statement was a “turning point” and that he “hopes to make progress on that path” on Wednesday.

Jeremy Hunt said the government hoped to make “progress” on this path. cut national insurance

(Jeff Overs/BBC/PA Wire)

But now two think tanks have warned the chancellor against further cuts. They say the poorest households will benefit little from the tax cut and will suffer a sharp decline in the services they depend on.

The Institute for Public Policy Research (IPPR) said that a further 2p reduction in the pound would cost the government £10.4 billion, almost half of which would end up in the pockets of the richest 20 per cent of households, while 3 per cent of the Funding would benefit the poorest 20 per cent of families.

The progressive think tank's analysis also shows disproportionate regional inequality, meaning households in London would receive on average £608, while households in the North East would see average gains as low as £342.

The New Economics Foundation (NEF) has warned that even a penny tax cut – which the Treasury would actively consider – would cost the government £4.8bn, with almost half would go to the richest households – while the poorest receive just £160 million.

This means the richest will receive 12 times more than the poorest, those on the highest incomes. highs receiving £424 more per year, compared to £34 per year for t...