Why Labour's tax attacks on the Tories are working

This week tens of millions of workers will receive their pay slips for the month of January and with them a tax cut. National Insurance is going down, so take-home pay is rising.

The NI tax cut is meant to signal a ‘gear shift’ – as the Prime Minister told this magazine last month – when it comes to taxation. Rishi Sunak and Jeremy Hunt have hinted that more cuts may follow in the spring Budget.

Will voters be grateful? In the past, the governing party has benefitted from pre-election tax cuts. Ahead of the Tories’ surprise victory in 1992, Norman Lamont introduced a 20p income tax rate. In 2005, Gordon Brown raised the thresholds for paying inheritance tax and stamp duty. In 2015, George Osborne increased the personal income allowance and cut beer duty before his party won a surprise majority.

The difference this time is that the freeze in thresholds and allowances will increase tax far faster than National Insurance cuts it. Taxes are at a post-war high and the burden is still rising. Indeed, according to a recent study by the Institute for Fiscal Studies, when all the budgets delivered since Sunak announced the freeze are considered together, no one in the country is paying less tax.

This is perhaps why the Chancellor’s announcement of the NI cut has not resulted in a poll bounce for the Tories. The £26 billion raised in stealth-tax rises may have had more of an effect than the £9 billion in tax cuts. The government’s critics are emboldened. This week, Simon Clarke, the former levelling up secretary, called for Sunak to resign, saying that the Prime Minister would lead the party into electoral oblivion.