Rishi Sunak has released a 76-page manifesto detailing present and future policies that the Conservative government intends to implement. The main cause for both approval and dispute was Sunak’s promise for a £17B overall nationwide tax reduction.
Key Details
The manifesto pledges that National Insurance will reduce from 8% to 6%. The Torys will also relieve stamp duty (tax on houses, land etc) for first-time buyers by over £400,000. They will increase the threshold for child benefit tax by £60,000 to £120,000. Earners will be better off as low as £150 and as high as £1300.
However, because the 2p NI cut accounts for more than half of the £17B, many wonder about the significance of the rest of the promised benefits. The manifesto also pledged to abolish National Insurance for the self-employed.
Many remarks have arisen from opposing Tories, Sir Kier Starmer and the Labour Party. Labour has criticised the manifesto as ‘the most expensive panic attack in history’, arguing that the money is not there to pay for the tax cuts. Rishi Sunak says that around £12B will be accounted for by reforming welfare schemes. However, he didn’t satisfactorily expand upon the idea. Sunak only vaguely mentioned ‘reforming the welfare system and getting more people into work’.
Implications
However, the Independent Institute for Fiscal Studies (IIFS), said that achieving a £12B return by 2030 looked ‘difficult’. Secretary of State for Health and Social Care, and Labour politician Wes Streeting, said that ‘the money simply isn’t there’.
Cutting civil service costs to achieve a £5B return was also promised, by reducing civil service employees by 70,000. However, the Institute for Government remarks that employee reductions would only make a ‘small dent’ in fiscal costs.
Circling back to the reduction on stamp duty tax, Sunak claims he would make ownership easier, but he contradicts this by claiming to understand that buying a home has gotten harder.
In summary, while Sunak is proposing an ambitious £17 billion tax-cutting plan, the search results suggest his “sums” or calculations do not add up in terms of realistic funding sources and affordability, leading to scepticism from opponents and analysts. The manifesto appears to be a risky electoral gambit rather than a fully costed policy platform, as indicated by Labour.
The impact which the manifesto might have had is likely to backfire in upcoming days, as Labour popularity and the threat of Reform UK opposition becomes increasingly persistent.
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Cover Image: The Financial Times