Dear Sir Robert,

I am writing to raise concerns about misleading statistical claims made by the Chancellor of the Exchequer, Jeremy Hunt, in relation to the tax burden on the British people.

In his Budget speech in the House of Commons on Wednesday 6th March, Mr Hunt claimed that “today… a Conservative Government brings down taxes”. He also referred a number of times to “our plan to deliver more jobs, better public services and lower taxes”.

In addition, on BBC Radio Scotland on the morning of Thursday 7th March, Mr Hunt claimed that Scotland “is the only part of the United Kingdom that is raising taxes”.

To the typical listener, these comments would clearly suggest that, outside of Scotland, either the overall tax burden is falling, or at least the personal tax burden is falling. However, neither of those things are true.

On the overall tax burden, the Office for Budget Responsibility (OBR)’s latest forecasts, published alongside the Budget, show it rising in each of the next five fiscal years – in cash terms, in real terms and as a share of GDP.

In fact, the OBR forecasts tax as a share of GDP to rise “to 37.1 per cent of GDP in 2028-29, which would be the highest level since 1948. This would be 4.0 percentage points above the pre-pandemic level of 33.1 per cent of GDP in 2019-20”.^[1]

On personal taxes, the Government’s cuts to national insurance rates are dwarfed by its tax rises, through freezes to the income tax and national insurance thresholds. The OBR’s forecasts show that – this year and in each of the next five years – the Government will take far more through its threshold freezes than it gives away through national insurance rate cuts.

In 2028-29, the OBR forecasts the threshold freezes to raise £41.1 billion, while the national insurance rate cuts will cost £21.4 billion. In other words, the rate cuts offset only around half of the Government’s tax rises. ^[2]

With both the overall tax burden and the personal tax burden rising in every one of the next five years, according to the OBR’s forecasts, I am concerned that Mr Hunt’s claims that the Government is “bringing down taxes” and delivering “lower taxes”, and that only Scotland is raising taxes, are misleading to the typical listener.

I am sure you will agree that all politicians – and especially senior Cabinet Ministers – should always be careful not to make misleading statistical claims like these, especially on something so important as the taxes people pay. I therefore ask that you investigate the Chancellor’s statements and offer your guidance.

Yours sincerely,
Sarah Olney
Liberal Democrat Treasury Spokesperson and MP for Richmond Park

 

Footnotes

^[1] OBR, Economic and fiscal outlook – March 2024, Paragraph 4.5 on page 80
^[2] ibid, Table 3.8 on page 68

 

Related links

Letter from Sir Robert Chote to Sarah Olney MP – statements on tax burden