Is the cut in national insurance contributions cause for celebration – or just a Rishi ‘raw deal’?

As Jeremy Hunt’s reduction in NI contributions takes effect, what does it mean for the taxpayer? Sean O’Grady explains what’s really going on with a policy rubbished by Labour’s Rachel Reeves as a ‘cynical giveaway’ in the run-up to an almighty election scrap

Labour’s Rachel Reeves has called the measure ‘a cynical giveaway from a weak and out-of-touch Tory government’ (PA)

Rishi Sunak has been making the most of the cut in national insurance contributions (NICs) announced by the chancellor in his autumn statement in November. In an unusual move, Jeremy Hunt made the reduction effective in the new year rather than the new fiscal year (which begins in April), thus providing a boost for January pay packets.

The 2 per cent reduction is worth about £450 for the average taxpayer (on about £35,000), while all those in paid employment – some 27 million people – will benefit. For this reason, Hunt called it “the largest ever tax cut for workers”.

Ministers say this is just the beginning of their tax-cutting agenda; critics point to the wider context of a historically high tax burden...