Rishi Sunak fact-checked over claim tax cuts will save workers £900

Experts have claimed ‘fiscal drag’ means that those earning less than £26,000 will actually be worse off after the cuts to National Insurance

Archie Mitchell,Tom Watling
Monday 29 April 2024 15:55 BST
Rishi Sunak pours himself '£900 cup of coffee' in bizarre attempt at TikTok trend

Rishi Sunak has been hit with a fact check after he claimed that his tax cuts will leave people £900 better off.

The prime minister was admonished over a cringe-inducing video in which he pours milk into a cup of coffee, revealing a £900 figure written on the side.

“Payday is coming,” Mr Sunak said, referring to the latest 2p cut to national insurance.

“Our second national insurance cut hits payslips tomorrow… it’s worth £900 to someone earning the UK average salary,” he added.

But the community notes feature on X, formerly Twitter, was quick to clarify the claim.

Citing fact-checking organisation Full Fact, the platform added a note on Mr Sunak’s post saying that average workers, those on £35,000 per year, will actually save just £340 annually.

The note also clarified that workers earning less than £26,000 will be worse off “when all tax changes are included”.

The difference is due to so-called fiscal drag, with the thresholds at which workers pay tax, or are taxed at higher rates, having been frozen since 2022.

Previously tax thresholds rose in line with inflation, meaning that workers were not dragged into higher tax brackets simply due to the rising cost of living.

After chancellor Jeremy Hunt announced the 2p cut during the spring Budget, his Labour counterpart Rachel Reeves described fiscal drag as a “big problem”.

“There are going to be millions more people paying tax by the end of the forecast period than there were previously, because as inflation and incomes grow, but the tax threshold doesn’t increase, more people are dragged into paying tax even though they’re really no better off because prices have just increased. I think that is a problem,” she told LBC’s Iain Dale.

She added: “My ambition is to grow the economy, that’s the number one mission of an incoming Labour government.

“And if we grow the economy in the way that I expect to then we will have money to be able to reduce the burden of tax on working people, and… have the money for some of that crucial public spending that is needed.”

The Institute for Fiscal Studies (IFS) said the latest NIC cuts “just serve to give back a portion of the money that is being taken away through other income tax and NICs changes”.

“Overall, for every £1 given back to workers (including the self-employed) by the NICs cuts, £1.30 will have been taken away due to threshold changes between 2021 and 2024, with this rising to £1.90 in 2027,” it wrote.

The day after the budget, Amol Rajan, host of Radio 4’s Today programme, described Mr Hunt as the “fiscal drag queen”.

He said: “They call you the British fiscal drag queen for good reason. Tax levels are the highest since 1948”.

Mr Hunt replied: “You accuse me of being a drag queen. I haven’t been called that before.” He later described the presenter as “unworthy” after Mr Rajan suggested the British economy was struggling.

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