It will be too early to call the results of this year’s general election, however what seems likely is that today’s Budget could be the last to be announced by a Conservative Chancellor of the Exchequer for some years to come.
In November 1996, the then Chancellor, Kenneth Clarke, delivered his fourth Budget statement. The Conservatives had been in power for 17 years; were trending on average 25 points behind a newly resurgent Labour party across most opinion polls; and were facing a formidable campaigner in the person of Tony Blair.
Despite Clarke cutting income tax, increasing personal allowances and thresholds, including for inheritance tax and capital gains tax, the Conservatives suffered a seismic defeat in the general election of the following May. In 1992 the Conservatives had won a 21-seat majority and in May 1997, New Labour won a 179-seat majority. The Conservatives were then out of government until 2010 when they went into coalition with the Liberal Democrats. The Conservatives did not command their own majority until 2015 – 18 years after their landslide defeat at the hands of New Labour.
“…Chancellor, Jeremy Hunt, has confirmed a much heralded 2p cut to National Insurance Contributions.”
Today’s Chancellor, Jeremy Hunt, has confirmed a much heralded 2p cut to National Insurance Contributions. The higher rate of capital gains tax on residential property has been reduced from 28% to 24%. There has been an increase in the earnings threshold above which parents lose child benefit. Additionally, the freeze on fuel duty and alcohol duty will continue and a British ISA will be introduced, together with a British Savings Bond, this latter with a three-year fixed return.
On the debit side, the furnished holiday letting regime is to be abolished and there will be higher passenger fuel duty for business and first-class air travel. In a further eye-catching move, the Chancellor announced the abolition of the current regime in relation to non- domiciled UK residents, together with the introduction of a new system from April 2025. Announcing this last change, Hunt mischievously cited, as his inspiration, the late Nigel Lawson who was Conservative Chancellor from 1983 to 1989, rather than the current Labour Party policy.
“…will these announcements be enough to turn Conservative fortunes or are the voters determined to see the back of them?”
So, will these announcements be enough to turn Conservative fortunes or are the voters determined to see the back of them?
There are much commented upon similarities between 1997 and now. The Conservatives have been in power for 14 years and are trending on average 20 points behind Labour in the opinion polls. What is missing, however, is someone of Blair’s campaigning zeal and ruthlessly deployed optimism. Today’s Labour leadership is determinedly managerialist – much like Rishi Sunak’s Conservative front bench – and will inherit the same dire set of fiscal circumstances as now, should they form the next administration.
As one observer has noted, whereas New Labour used the catchy 1993 tune ‘Things Can Only Get Better’ by D:Ream as their campaign song in 1997, perhaps this time the song should be re-recorded as ‘Things Can Only Be Similar’.