Residents will shortly begin to see this Government’s significant National Insurance cuts filter through in their paypackets. This has been made possible by the careful work of the Prime Minister and Chancellor to steer the UK through a difficult two years. As a Conservative, I strongly believe in a culture of tax cuts and living within our means. Effective management of the economy means that, not only is the Government increasing spending on the NHS, but it is now looking at reducing the tax burden.
The National Insurance Contributions Bill that was debated in Parliament today cuts National Insurance Contributions (NICs) by two percentage points to 8% on earnings between £12,570 and £50,270 from 6 April 2024. That will cut taxes for over 27 million employees. The average worker on £35,400 a year will save £450 a year, and the majority will see the benefit in their payslips at the start of the new tax year. Taken together with the cuts to NICs in the Autumn Statement, this tax cut is worth some £900 a year to the average worker.
For families on lower income this saving will make a significant impact on their standard of living. As I referred to in my speech, these savings come at a time when households face higher household bills. £8 a week accumulated over the period of a year is a valuable contribution towards a better standard of living.
When combined with the cuts previously announced, this is a cut worth almost £20 billion per year—the largest-ever cut to employee and self-employed national insurance. Because of the Prime Minister’s plan for the economy, the average earner in the UK now has the lowest effective personal tax rate since 1975.
In my remarks, I largely focused on the real-world impact of these fiscal changes. As I alluded to, statistics show that the largest increase in discretionary expenditure has been from lower-income working households. This is a positive endorsement of the Government’s fiscal strategy, with the Conservatives we have seen jobs created, unemployment slashed and foreign investment increased. I strongly support the Government’s measures and its plans for the future.
