The Chancellor claims to have delivered the “budget for long-term growth”; his critics claim it’s merely more “smoke and mirrors”. But what effect will the Budget have on the general public, and how will it shape the ever-looming election?
The Budget is often deemed a pivotal event in the political calendar, setting the economic and political tone for the oncoming season. With an election looming and the cost-of-living crisis lingering, demands for the Chancellor to deliver hope for fiscal prosperity have never been greater.
As pressure mounts for Jeremy Hunt, the Chancellor has received little praise, despite varying support for individual policies. Paul Johnson, Director of the Institute of Fiscal Studies, (IFS) claimed the Budget is once again, “smoke and mirrors”; Leader of the opposition, Keir Starmer claimed the budget to be “the last desperate act of a party that has failed”. Between the fiscal jargon and the partisan narratives, the Budget’s concrete changes are often overlooked. So, what will Hunt’s decisions change for the general public, and how will the Spring Budget affect the political landscape?
Vape and Smoke Duty
If not mirrors, smoke certainly influenced heavily the direction of Chancellor Hunt’s Budget. To be implemented in October 2026, the Chancellor announced a duty on vapes “to discourage non-smokers taking up vaping”. Additionally, the Chancellor announced an increase in tobacco duty to “maintain the financial incentive to choose vaping over smoking”.
Aligning with Sunak’s wider policy of creating a “smoke-free generation, Hunt’s duty plans act as an extension of Sunak’s Tobacco and Vapes Bill, banning the sale of vapes to anyone born after 2009. The policy is largely seen as Sunak’s bid at legacy-building. However, the minute criticism of the policy has largely been internal, emanating from the right of the Conservative party. Former PM Truss referred to the proposal as “profoundly unconservative” and “seeking to extend the nanny state”, once again illuminating the rifts within Sunak’s party.
National Insurance Tax Cuts
Attracting much of the media’s focus, Hunt announced a further 2p tax cut to National Insurance, matching a similar cut last Autumn. This headline-grabbing policy has largely been justified by the Chancellor’s claims that “debt is falling in line with our fiscal rules”. Yet, according to fact-checking charity ‘Full Fact’, debt is not falling but instead is forecast to fall. Full Fact cites the Office for Budget Responsibility, (OBR) which projects that debt won’t fall until 2026-27.
However, despite the misleading reasoning for the cuts, IFS director Paul Johnson has given restrained praise to Hunt for choosing to cut National Insurance over income tax as it “reduces the tax wedge between different sorts of income [and] benefits those of working age in work”
Non-dom tax and child benefits
In order to fund tax cuts in an economy where, according to Keir Starmer, “The national credit card- [is] maxed out”, the Chancellor announced two new policies to raise the necessary revenue.
Firstly, the Chancellor declared his intent to abolish the non-dom tax system. Under the current system, UK residents with overseas companies and property abroad do not have to pay tax on foreign income in the UK if they claim non-dom status. This caused controversy for Sunak during his time as Chancellor after it was discovered his wife, Akshata Murty claimed non-dom status, resulting in her saving millions in tax on foreign earnings. Hunt’s plan will also greatly damage the Labour party as the abolition of non-dom status was initially a Labour policy, anticipated to fund many of the party’s manifesto pledges.
The Chancellor also announced his plans to reform the “confusing and unfair” child benefits system. In a move perceived as both less political and less divisive, Hunt promises to change the upper threshold for Child benefits, to be determined by household income rather than the highest-earning parent to reduce inequalities within the system. IFS’s Paul Johnson has referred to the current system as a “rather bizarre method”, welcoming Hunt’s reforms as they will “mitigate some of the worst features of the current system”.
Northern Ireland
In regard to Northern Ireland, Chancellor Hunt’s Budget also contained plans to reinvigorate the Northern Irish economy following Stormont’s two-year deadlock. Firstly, Hunt allocated Northern Ireland a further £100 million for the financial year on top of the £3.3billion promised for Stormont’s return. Northern Ireland Secretary Chris Heaton-Harris argues “this will provide a further boost to the Executive’s spending power to invest in its own priorities”. However, it is noteworthy that this funding is allocated by the Barnett formula, meaning it’s based wholly on the region’s proportion of population. The budget also included £20 million in funding for each of Ulster University’s two campuses outside Belfast.
Despite an election encroaching for Sunak and Hunt, the Chancellor’s Budget was, perhaps, less ambitious than expected. Tax remains the highest for 70 years, inflation is yet to fall, and growth is still projected lower than the Eurozone and G7 average. Reporting on the Spring Budget, think tank Resolution Foundation argue Hunt has left “the big picture little changed”, perceiving tax cuts as simply, “a second dollop of pre-election giveaways” and focused on how “for the first time, incomes are set to fall over the course of a parliament.”
So, while individual policies may harm Labour’s electoral plans, the Spring Budget has little momentum to broadly increase Conservative support. Moreover, Hunt’s lack of radical ambition to alter the fiscal landscape leaves little hope for a rapid recovery for the UK economy.