|  Updated: 

Spring Budget 2024: Tax cuts are ‘bad economics and politics’ and voters prefer investment, Tony Blair Institute finds

By:

Add as a preferred source on Google
Government borrowing has ballooned since the early 2000s as a result of a succession of crises, rising from around £300bn in 2003 to as much as £2.5trn last year.
Government borrowing has ballooned since the early 2000s as a result of a succession of crises, rising from around £300bn in 2003 to as much as £2.5trn last year.

A majority of voters want the government to prioritise long-term investment in public services in the Spring Budget rather than tax cuts, according to new polling conducted for the Tony Blair Institute (TBI).

A survey from Deltapoll found that 52 per cent of voters want the government to spend any fiscal windfall on long-term investment in public services.

Only 11 per cent of people want any extra funding to be used for tax cuts, either for households or businesses. Just over a fifth (21 per cent) want the government to concentrate on short-term measures to tackle immediate emergencies in public services.

“Not only are tax cuts bad economic policy right now, our new polling suggests they may also be bad politics,” Tom Smith, director of economic policy at the TBI said.

Changing rate expectations have constrained the Chancellor’s options ahead of the Spring Budget.

Research from Dutch bank ING suggests that Hunt will have about £18bn in headroom to meet his key fiscal target of having debt falling in five years time, down from as much £30bn in mid-January.

Rather than cutting income tax, the Chancellor will reportedly reduce national insurance by one per cent, which would follow a two per cent reduction in November’s Autumn Statement.

However, economists have warned that Hunt has pencilled in deep spending cuts after the election in order to finance the tax cuts.

Day-to-day public spending will increase by 0.9 per cent in real terms after the election but given existing spending commitments, this will mean unprotected government departments face big cuts.

According to the Office for Budget Responsibility (OBR), the plans imply real terms cuts of around 10 per cent in some services.

“These cuts are severe – around half as large as the austerity period of the early 2010s,” Smith said.

“The only sustainable path to delivering them is fundamental reform of the State and the way public services are delivered,” Smith continued.

“The Budget is an opportunity to begin down that path – to make the investments needed to reposition Britain for longer term success, harnessing the rapid changes in technology to transform public services, do more for less, and reimagine the State for the 21st century,” he argued.