Jeremy Hunt’s pledge to scrap national insurance ‘more reckless than Liz Truss’ says Rachel Reeves

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Labour has denounced Jeremy Hunt’s plan to scrap national insurance as “reckless” following his Budget pledge to cut the tax by 2p.

Shadow chancellor Rachel Reeves refused to back the move, arguing it was a bigger tax cut than those introduced by former prime minister Liz Truss which sparked an short-lived but costly economic crash.

Ms Reeves said abolishing national insurance would cost £46 billion every year and Labour would not back the move because Mr Hunt had not explained how it would be paid for.

Jeremy Hunt has said he wants to get rid of ‘unfair’ national insurance

(Getty)

Ms Reeves told BBC Radio 4’s Today programme: “The Government has suggested it would cut NI entirely at a cost £46 billion a year – that is a bigger unfunded tax cut commitment then even Liz Truss and Kwasi Kwarteng tried.

“I want taxes to come down for working people but I am never going to make a commitment without saying where the money is going to come from. That is a clear difference between the Chancellor and how I would operate.”

It comes after the chancellor used his Budget to hand voters a desperate 2p national insurance cut – before signalling his desire to abolish the tax altogether.

Unveiling the cut, Mr Hunt told MPs that “the way we tax people’s income is particularly unfair”.

“If you get your income from having a job, you pay two types of tax – national insurance contributions and income tax. If you get it from other sources, you pay only one,” he said. “This double taxation of work is unfair [and]… penalises work instead of encouraging it.”

Rachel Reeves said Mr Hunt’s promise was even more reckless than Liz Truss’s mini budget

(PA Wire)

Allies of the chancellor made clear after the Budget that he backs the abolition of NI entirely. And in an email to Conservative Party members, Mr Hunt said it was his plan to eliminate national insurance “in the next Parliament”.

Quizzed about the suggestion on Thursday, Mr Hunt doubled down, again describing it as an “unfair” levy. He admitted it will not happen “any time soon”, but suggested one option would be to merge income tax and national insurance.

It came as an exasperated Ms Reeves told the BBC: “The question to the chancellor is, is this a real promise? Is this a real commitment and if so, how is it going to be funded?”

Labour has accused the Conservatives of “shaking the magic money tree” over the pledge.

Its analysis of the new Tory promise showed it would cost £46bn per year, or £230bn over a five-year parliament.

Liz Truss and Kwasi Kwarteng’s mini budget sent mortgage bills spiralling

(Getty Images)

Shadow chief secretary to the Treasury Darren Jones said the Conservatives wanted to “re-run the Liz Truss experiment”.

Markets crashed in the autumn of 2022 after Ms Truss and Mr Kwarteng used a so-called mini budget to unveil £45bn of unfunded tax cuts – including abolishing the 45p top rate of income tax.

Mr Kwarteng was quickly sacked, with Mr Hunt brought in to steady the ship by scrapping almost all of the measures announced.

Ms Truss was then forced to resign amid the fallout of the mini budget, which spooked investors and sent mortgage rates rocketing.

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