The last few years have not been easy for the British economy nor locally here in Hastings and Rye. We have faced the legacy of Covid, war in Ukraine and the Middle East. These challenges have made life tough for people in Hastings and Rye. Since the beginning of 2023, the Government has been working on five priorities, three of which are economic; to halve inflation, grow the economy and reduce debt.
No one can doubt that we have made good progress, and this is thanks to you, the people and businesses of Hastings and Rye, as well as Conservative Government policies. Inflation has fallen from 11.1 per cent to 3.4 per cent, the economy has performed better than forecast, wages are rising, mortgage rates are starting to come down, the economy has outperformed European neighbours and debt is on track to fall as a share of the economy.
The job is clearly not finished – we have some way to go - but because of the progress the Government has made, the economy is turning a corner and we have been able to afford tax cuts as part of our plan to reward work and grow the economy. For example, the Autumn Statement last year and recent Budget together have delivered National Insurance Contribution cuts totalling £20 billion benefiting the average worker by over £900 - giving the average earner the lowest effective personal tax rate since 1975. We also saw tax cuts for self-employed people by cutting the main rate of Class 4 NICs from nine per cent to six per cent and combined with the tax cuts for the self-employed at the Autumn Statement, this is a tax cut of around £650 for an average self-employed person earning £28,000 a year. Increasing the VAT registration threshold for small businesses will also help. These measures will benefit many working people across Hastings and Rye.
It is worth commenting that National Insurance is a tax on work and the ambition of Conservatives is to abolish it entirely, by cutting it incrementally. It is not right that if you work you pay NICs and Income Tax, but if you earn money from other sources, you only pay one tax. The system needs to be simplified and made fairer, but this cannot happen overnight. It must be done in a fiscally responsible way and when it can be achieved without compromising our public services. The aim is to make significant progress on this in the next parliament. To counter Labour scaremongering on this point, the value of NICs receipts do not determine the NHS budget or the value of pensions and this ambition will have no bearing on Conservative commitment to pensions and the NHS.
I welcome the measures to support families with changes to the High-Income Child Benefit Charge, by raising the threshold from £50,000 to £60,000 and halving the rate at which Child Benefit is withdrawn, so that it is not paid in full until you earn over £80,000. This will benefit a not insignificant number of parents locally. In addition, the unfairness for single earner families will end by moving towards a household system by April 2026. It is not right that two parents earning £49,000 a year receive full Child Benefit, but a household with a single earner on just £50,000 starts losing their Child Benefit.
This builds on the Government’s Autumn Budget, which delivers the most significant expansion of childcare in a decade so that from September 2025, working families in England will be offered 30 hours of free childcare for their child aged nine months old up to school age. This is a package worth £6,500 for every family with a two-year-old using 35 hours of childcare a week, in turn helping more parents into the job that is right for them.
Taken together, all these measures will support hard-working families, by helping parents pay for the costs associated with having children so they can balance their work alongside being a parent and enabling them to keep more of their own money in their pockets.
I support this Government and its plan to deliver a bolder, brighter future for you and your family in Hastings and Rye.