The first Budget after a general election has often been the one in which the largest tax increases are announced. From a political viewpoint the timing makes good sense: it is the Budget furthest away from the next election. An added benefit is that the Budget’s contents can most easily be blamed on the previous regime, if there has been a change of government. In October 2024, both these factors apply, with an hors d’oeuvre of a newly
discovered ‘£22 billion black hole’ already having been served three months ago.
Last March’s Budget contained over £13bn of tax cuts for 2024/25, nearly three quarters of which were attributable to personal National Insurance Contributions (NICs) reductions. At the time these cuts were seen by many economists as deferring some difficult tax and spending decisions that would have to be addressed post-election. This gloomy forecast was reinforced by the decision of Jeremy Hunt, the then Chancellor, to delay a Spending
Review until after the polls had closed. Consequently, the second Budget of 2024 has been accompanied by part one of that Review (running to April 2026), with part two (covering 2026/27 and 2027/28) due alongside the Spring Statement 2025.
