Richest households will benefit 12 times more than poorest from national insurance cut, says thinktank – UK politics live

On Wednesday Jeremy Hunt will deliver the last budget before the general election.

LIVE – Updated at 10:12

On Wednesday the Jeremy Hunt will deliver the last budget before the general election.

10:12

More than 300 migrants arrived in the UK after crossing the Channel on the day a seven-year-old girl died when a boat capsized, PA Media reports. PA says:

Home Office figures show 327 people made the journey in eight boats on Sunday, taking the provisional total for the year so far to 2,582. This suggests an average of around 41 people per boat.

It comes after the French coastguard said the girl who drowned had been trying to cross the Channel with her pregnant mother, her father and three siblings in a boat carrying 16 people.

Another couple, two men and six young children were also on board when the boat got into difficulty in the early hours of the morning off the French coast, the Prefet du Nord said. They were all taken to hospital in Dunkirk.

09:56

This chart from the New Economics Foundation shows how households in the richest quintile (20%) gain 12 times as much as households in the poorest quintile.

The chart shows the figures as £2bn compared to £0.2bn, but the £0.2bn has been rounded up from £160m. (See 9.33am.)

And this chart from the NEF shows much much households would benefit from a 1p in the pound cut in national insurance, compared with a £60 per month increase in universal credit, by income vingtile (5%).

Opening summary

09:37

Good morning. On Wednesday Jeremy Hunt, the chancellor, will deliver the last budget before the general election. As usual, there’s an expectation management process going on, influencing a lot (but not all) of the pre-budget reporting, but the political backdrop makes it more complicated than usual. The standard approach is to play down expectations in advance, so that when an unexpected tax cut or spending announcement comes out in the last five minutes of the speech, MPs and the media are surprised and impressed, and the coverage takes off on a cloud of positivity. But with the Conservative party still about 20 points behind in the polls (the latest figures are on the Guardian’s poll tracker), No 10 and the Treasury have been talking up the propect of tax cuts for months because that is the only way of holding off a Tory party mutiny. Hunt’s scope for giveaway measures is limited, but on his own side expectations are still high and the best reporting over the weekend and today suggests that 1p in the pound cut, almost certainly to national insurance rather than income tax, is already in the bag, and that a 2p cut might be a possibility.

This morning the New Economics Foundation has published research saying that if Hunt does cut national insurance in this manner, the richest households will benefit 12 times more than the poorest in cash terms. This is not a surprising or controversial assessment; much the same was said when Hunt cut national insurance by 2p in the pound in the autumn statement. But it is a point that has not received much attention in the debate in recent days, partly because Labour does not want to be seen as opposing a possible tax cut that would benefit ordinary workers.

Here is an extract from the NEF’s news release.

If the chancellor announces a 1p cut to national insurance in this week’s budget, it will benefit the richest 20% of households 12 times more than poorest 20%, with those on the highest incomes receiving an additional £424 per year compared to £34 per year for those on the lowest.

It means £2bn of the £4.8bn tax cut will go to the wealthiest, while the poorest will benefit by just £160 million.

At the same time, households in London and the south east will be the biggest winners, gaining £252 per year on average compared with a £175 annual increase for households across the North.

And this is from Sam Tims, a senior economist at the NEF.

Everywhere you look, from our schools to hospitals to high streets, our country is falling apart at the seams while millions of people struggle to get by. Yet at the same time our chancellor is pushing for tax cuts that the country does not want, and that will benefit those who already have the most.

Not only will this reduce government income in the immediate future, but it will also worsen inequality making us all poorer and harming the country’s prospects.

As Richard Partington and Aletha Adu report, new polling from YouGov supports the claim that tax cuts are not a priority for many people.

Here is the agenda for the day.

10.30am: Liz Kendall, the shadow work and pensions secretary, gives a speech

11.30am: Downing Street holds a lobby briefing.

2.30pm: George Galloway, the new MP for Rochdale, takes his seat in the Commons.

2.30pm: Michael Gove, the levelling up secretary, takes questions in the Commons.

After 3.20pm: Peers begin the report stage of the safety of Rwanda (asylum and immigration) bill.

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