11 Jun 2024

Sunak has ‘clear plan’ to lower tax, says Work and Pensions Secretary

Shortly after the manifesto launch, we spoke to the Work and Pensions Secretary Mel Stride, and began by asking him if he understood why the Conservatives have a credibility problem when it comes to tax cuts.

Mel Stride: We stepped in to support the economy during Covid, a huge commitment around furlough, supported millions of jobs and families up and down the country. We also supported families with cost of living payments due to the high inflation imported for the war in Europe. That cost about £400 billion and it’s quite right and expected that there will be more tax to pay that down. But what’s happening now, of course, is a change in direction. We are now seeing taxes coming down. That’s why…

Krishnan Guru-Murthy: No, they’re not.

Mel Stride: …we’ve already reduced national insurance…

Krishnan Guru-Murthy: That’s not true, is it?

Mel Stride: …by a third.

Krishnan Guru-Murthy: We’re seeing a tax come down, while others go up.

Mel Stride: What we’re seeing is a trajectory which is now on a downward direction in terms of the new tax changes that are coming in. So national insurance, as I say, reduced by a third.

Krishnan Guru-Murthy: Is the tax burden going to go down next year and the year after?

Mel Stride: What I’m saying is that the trajectory now is on a downward path in terms of the measures that we are bringing in. There are no tax rises…

Krishnan Guru-Murthy: Is it going down? Sorry, I’m not clear, is it going down as a result of your measures?

Mel Stride: Well, no, because you’re…

Krishnan Guru-Murthy: So it’s not going down, is it? It’s going up.

Mel Stride: The tax burden, compared to the previous forecast before the measures in the manifesto, will be around 1% lower as a consequence of those measures.

Krishnan Guru-Murthy: Okay, so tax is still going up. It’s just not going up by as much as a result of these measures. In terms of these measures…

Mel Stride: You’ve got a clear choice…

Krishnan Guru-Murthy: No, hang on, that’s true. Let’s just move on to the next question. In terms of self-employed national insurance contributions, you’re getting rid of class 4 contributions completely. So that’s a 6% cut for anybody who’s self-employed. Is that right?

Mel Stride: Correct. We’ve already gone down from 9% to 6 and we’ll go from 6% to 0%, ie total abolition by the end of the next parliament.

Krishnan Guru-Murthy: How would you qualify for your state pension?

Mel Stride: You can still, for example, have a system where you could have a nil rate of national insurance and still have that as a contribution to the state pension.

Krishnan Guru-Murthy: So self-employed people will just get a pension for free?

Mel Stride: They will make their contribution to the economy in the normal way. As we know, the state pension is not hypothecated through national insurance. That’s a well-worn myth.

Krishnan Guru-Murthy: No, but in order to qualify for the state pension, you need a certain number of years…

Mel Stride: It’s funded….

Krishnan Guru-Murthy: …of national insurance contributions.

Mel Stride: Yes, and if you make those contributions at 0%, that would still be a potentially, potentially a route for qualification. But my point is that the state pension, of course, is funded through general taxation, and self-employed people pay all sorts of taxes and made a major contribution.

Krishnan Guru-Murthy: So this is going to create quite an unfairness, isn’t it, between people who are employed, who have to have ten years of national insurance contributions in order to qualify for the state pension, and people who are self-employed, who don’t have to do anything?

Mel Stride: As I say, there will be perfectly reasonable ways of making sure that self-employed people still qualify for their state pension. We want to actually encourage…

Krishnan Guru-Murthy: Doesn’t sound like you’ve worked it out.

Mel Stride: We want to encourage the self-employed. We’ve completely worked it out and I’ve answered all your questions in that respect.

Krishnan Guru-Murthy: The other credibility problem you have is how are you going to pay for all of this? Because in your little sort of account, you’re relying a huge amount on efficiency savings and welfare cuts without really saying how you’re going to get there, and you might not.

Mel Stride: I think the two main sources of savings, actually, don’t involve efficiency savings. They’re both about clamping down on tax avoidance and evasion. We were saying there’s 6 billion to be found there, 12 billion…

Krishnan Guru-Murthy: But you’re guessing.

Mel Stride: …from reducing… No, we’re not guessing at all. Judge us by our track record. We’re very good at clamping down on avoidance and evasion.

Krishnan Guru-Murthy: The last few days has been pretty disastrous for your campaign, hasn’t it, after Rishi Sunak’s D-Day gaffe? The polls are terrible, the gap’s widening, Nigel Farage is in the game. There’s a sense in which it doesn’t really matter what you say, does it, because people aren’t listening?

Mel Stride: What we are doing is setting out a very clear binary choice, and the choice is either a clear plan with Rishi Sunak and the Conservatives, to get taxes down, to increase people’s financial security, or no plan under Keir Starmer. It’s a very clear choice. We will keep making that day in, day out. We will fight for every single vote between now and election day. And do you know what? The biggest and most important poll that matters here is what happens on July the 4th, and we have about three and a half weeks still to make our case, and I think we’ve powerfully furthered that case today with this manifesto launch.