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Chancellor Jeremy Hunt is unsure if the government can afford further tax cuts – as a National Insurance (NI) reduction comes into force today.

The pre-election cut to NI, from 12% to 10%, will impact around 27 million payroll employees across the UK.

A person earning the UK’s average salary of £35,000 will save £450 a year, or £37.38 a month, as a result of this change.

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Mr Hunt said the reduction, announced in his Autumn Statement last year, means “that a typical family with two earners will be nearly a thousand pounds better off this year”.

But Labour argued this wasn’t true, saying frozen income tax and national insurance thresholds mean that many families have been drawn into higher tax bands.

The Opposition’s new attack ads criticising the policy even made it onto the Tory-supporting website Conservative Home on Friday.

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Shadow chancellor Rachel Reeves said: “Under Rishi Sunak’s raw deal, for every extra £10 people are paying in tax they are only getting £2 back.”

A van in Wellingborough, North Northamptonshire, displaying Labour's poster campaign of what it calls "Rishi's raw deal" for taxpayers ahead of the reduction in national insurance contributions on January 6. Picture date: Friday January 5, 2024.
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Labour attack ad

‘If I can afford to go further I will’

In a statement on Saturday, Mr Hunt said he wanted to further ease the tax burden, which is expected to rise to the highest level since the Second World War before the end of this decade, but he doesn’t yet know if he can.

He called the NI reduction “the start of a process”, adding: “If I can afford to go further I will… I don’t yet know if I can.

“We want to do this because it helps families, it also helps to grow the economy, and we believe that a lightly taxed economy will grow faster and in the end that’ll mean more money for public services like the NHS.”

Mr Hunt argued the Conservative government “wants to bring down taxes” and recognises that “families are finding life really tough”.

But he defended its previous measures, saying: “It was right to support families through COVID and through the cost of living crisis, and yes taxes had to go up in that period.”

The government says its NI reduction is the biggest tax cut on record for workers.

The chancellor added: “Even after the effect of the tax rises that have happened previously, this means that a typical family will see their taxes go down next year.”

Jeremy Hunt leaves Downing Street to deliver the autumn statement in the Commons
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Jeremy Hunt leaves Downing Street to deliver the autumn statement in the Commons

Will Hunt cut taxes again before election?

The clock is ticking for Mr Hunt to find the fiscal headroom to cut taxes again.

The spring budget, pencilled in for 6 March, will be the last chance for him to make major tax and spending promises before the election, which Mr Sunak has said will likely be in the second half of the year.

Following the Autumn Statement in November, the government has faced pressure from Tory MPs to go further and cut income tax or inheritance tax.

While many campaigners welcomed the National Insurance changes, they pointed out that the tax burden remains at record high levels for Britons – thanks in part to the threshold at which people start paying personal taxes being frozen, rather than rising with inflation.

Mr Sunak introduced the current tax freezes when he was chancellor back in 2021 and as prime minister, extended the time they would need to be in place, from 2026 to 2028.

This causes a so-called “fiscal drag” as pay goes up but tax thresholds don’t, so more people are dragged into higher tax brackets.

The Institute for Fiscal Studies has said the Autumn Statement gave back just £1 in tax cuts for every £4 of tax rises due to threshold freezes since 2021.

Ms Reeves claimed that despite the NI cut, the average family was paying £1,200 extra tax this year “because of choices by Rishi Sunak and this Conservative government”.

“Never have people paid so much in tax and got so little in return in the form of public services,” she said.

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However, the Labour leadership has not committed to cutting tax or unfreezing the thresholds if they win the election.

Sir Keir Starmer told Sky News his priority is to grow the economy and he won’t make promises he can’t keep – but that he does want to “lower the burden of working people”.

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Sir Keir Starmer says US-UK trade talks ‘well advanced’ and rejects ‘knee-jerk’ response to Donald Trump tariffs

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Sir Keir Starmer says US-UK trade talks 'well advanced' and rejects 'knee-jerk' response to Donald Trump tariffs

Sir Keir Starmer has said US-UK trade talks are “well advanced” ahead of tariffs expected to be imposed by Donald Trump on the UK this week – but rejected a “knee-jerk” response.

Speaking to Sky News political editor Beth Rigby, the prime minister said the UK is “working hard on an economic deal” with the US and said “rapid progress” has been made on it ahead of tariffs expected to be imposed on Wednesday.

But, he admitted: “Look, the likelihood is there will be tariffs. Nobody welcomes that, nobody wants a trade war.

“But I have to act in the national interest and that means all options have to remain on the table.”

Politics latest: Ministers hail ‘huge’ minimum wage boost as bills rise

Sir Keir added: “We are discussing economic deals. We’re well advanced.

“These would normally take months or years, and in a matter of weeks, we’ve got well advanced in those discussions, so I think that a calm approach, a collected approach, not a knee-jerk approach, is what’s needed in the best interests of our country.”

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Downing Street said on Monday the UK is expecting to be hit by new US tariffs on Wednesday – branded “liberation day” by the US president – as a deal to exempt British goods would not be reached in time.

A 25% levy on car and car parts had already been announced but the new tariffs are expected to cover all exports to the US.

Jonathan Reynolds, the business and trade secretary, earlier told Sky News he is “hopeful” the tariffs can be reversed soon.

But he warned: “The longer we don’t have a potential resolution, the more we will have to consider our own position in relation to [tariffs], precluding retaliatory tariffs.”

He added the government was taking a “calm-headed” approach in the hope a deal can be agreed but said it is only “reasonable” retaliatory tariffs are an option, echoing Sir Keir’s sentiments over the weekend.

Read more:
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Starmer and Trump discuss US-UK ‘prosperity’ deal

Donald Trump speaks to reporters aboard Air Force One. Pic: Reuters
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Donald Trump speaks to reporters aboard Air Force One on Sunday. Pic: Reuters

Tariff announcement on Wednesday

Mr Trump has been threatening tariffs – import taxes – on countries with the biggest trade imbalances with the US.

However, over the weekend, he suggested the tariffs would hit all countries, but did not name them or reveal which industries would be targeted.

Read more: How Trump’s tariffs could affect the UK

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‘Everything on table over US tariffs’

Mr Trump will unveil his tariff plan on Wednesday afternoon at the first Rose Garden news conference of his second term, the White House press secretary said.

“Wednesday, it will be Liberation Day in America, as President Trump has so proudly dubbed it,” Karoline Leavitt said.

“The president will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decades. He’s doing this in the best interest of the American worker.”

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Trump’s tariffs: What can we expect?

Tariffs would cut UK economy by 1%

UK government forecaster the Office for Budget Responsibility (OBR) said a 20 percentage point increase in tariffs on UK goods and services would cut the size of the British economy by 1% and force tax rises this autumn.

Global markets remained flat or down on Monday in anticipation of the tariffs, with the FTSE 100 stock exchange trading about 1.3% lower on Monday, closing with a 0.9% loss.

On Wall Street, the S&P 500 rose 0.6% after a volatile day which saw it down as much as 1.7% in the morning.

However, the FTSE 100 is expected to open about 0.4% higher on Tuesday, while Asian markets also steadied, with Tokyo’s Nikkei 225 broadly unchanged after a 4% slump yesterday.

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Blockchain Association CEO will move to Solana advocacy group

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Blockchain Association CEO will move to Solana advocacy group

Blockchain Association CEO will move to Solana advocacy group

Kristin Smith, CEO of the US-based Blockchain Association, will be leaving the cryptocurrency advocacy group for the recently launched Solana Policy Institute.

In an April 1 notice, the Blockchain Association (BA) said Smith would be stepping down from her role as CEO on May 16. According to the association, the soon-to-be former CEO will become president of the Solana Policy Institute on May 19.

The association’s notice did not provide an apparent reason for the move to the Solana advocacy organization nor say who would lead the group after Smith’s departure. Cointelegraph reached out to the Blockchain Association for comment but did not receive a response at the time of publication.

Cryptocurrencies, United States, Solana, Policy

Blockchain Association CEO Kristin Smith’s April 1 announcement. Source: LinkedIn

Smith, who has worked at the BA since 2018 and was deputy chief of staff for former Montana Representative Denny Rehberg, will follow DeFi Education Fund CEO Miller Whitehouse-Levine, leaving his position to join the Solana Policy Institute as CEO. According to Whitehouse-Levine, the organization plans to educate US policymakers on Solana.

Related: Congress on track for stablecoin, market structure bills by August: Blockchain Association

With members from the crypto industry, including Coinbase, Ripple Labs, and Chainlink Labs, the BA has filed a lawsuit against the US Internal Revenue Service, challenging regulations requiring brokers to report crypto transactions. The group often criticized the US Securities and Exchange Commission under former chair Gary Gensler for its “regulation by enforcement” approach to crypto, resulting in steep legal fees for many companies.

Less than 48 hours after the Solana Policy Institute’s launch, it’s unclear what the group’s immediate goals may be for engaging with US lawmakers and advocating for the industry. The organization described itself as a non-partisan nonprofit group.

Magazine: Solana ‘will be a trillion-dollar asset’: Mert Mumtaz, X Hall of Flame

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Payouts for departing civil servants capped at £95,000 under voluntary exit scheme

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Payouts for departing civil servants capped at £95,000 under voluntary exit scheme

The most senior and long-serving civil servants could be offered a maximum of £95,000 to quit their jobs as part of a government efficiency drive.

Sky News reported last week that several government departments had started voluntary exit schemes for staff in a bid to make savings, including the Department for Environment and Rural Affairs, the Foreign Office and the Cabinet Office.

The Department for Health and Social Care and the Ministry of Housing and Local Government have yet to start schemes but it is expected they will, with the former already set to lose staff following the abolition of NHS England that was announced earlier this month.

Politics latest: PM admits cost of living crisis ‘ongoing’

Rachel Reeves, the chancellor, confirmed in last week’s spring statement that the government was setting aside £150m to fund the voluntary exit schemes, which differ from voluntary redundancy in that they offer departments more flexibility around the terms offered to departing staff.

Ms Reeves said the funding would enable departments to reduce staffing numbers over the next two years, creating “significant savings” on staff employment costs.

A maximum limit for departing staff is usually set at one month per year of service capped at 21 months of pay or £95,000.

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Whitehall sources stressed the figure was “very much the maximum that could be offered” given that the average civil service salary is just over £30,000 per year.

Whitehall departments will need to bid for the money provided at the spring statement and match the £150m from their own budgets, bringing the total funding to £300m.

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Spring statement 2025 key takeaways

The Cabinet Office is understood to be targeting 400 employees in a scheme that was announced last year and will continue to run over this year.

A spokesman said each application to the scheme would be examined on a case-by-case basis to ensure “we retain critical skills and experience”.

It is up to each government department to decide how they operate their scheme.

The voluntary exit schemes form part of the government’s ambition to reduce bureaucracy and make the state more efficient amid a gloomy economic backdrop.

Ahead of the spring statement, Ms Reeves announced plans to cut civil service running costs by 15% by 2030, which ministers have said will save £2.2bn.

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The move could result in 10,000 civil service jobs being axed after numbers ballooned during the pandemic.

Ms Reeves hopes the cuts, which she said will be to “back office jobs” rather than frontline services, but civil service unions have raised concerns that government departments will inevitably lose skilled and experienced staff.

The cuts form part of a wider government agenda to streamline the civil service and the size of the British state, which Sir Keir Starmer criticised as “weaker than it has ever been”.

During the same speech, he announced that NHS England, the administrative body that runs the NHS, would also be scrapped to eliminate duplication and cut costs.

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