When Jeremy Hunt stood before Parliament in March 2024 to deliver his final budget as Chancellor, few expected the political aftershocks to last beyond the election. Yet twelve months later, those decisions — a 2 percentage point rise in employers’ National Insurance, £40 billion in total tax increases, and a freeze on tax thresholds — are now the unspoken framework of Rachel Reeves’s 2025 fiscal strategy. The irony? Labour campaigned on not raising taxes on working people. Now, they’re forced to do exactly that — not because they wanted to, but because Hunt’s legacy left them with no other choice.
The Fiscal Black Hole Hunt Left Behind
Hunt’s March 2024 budget didn’t just respond to economic headwinds — it created them. Facing a £22 billion gap in public finances, he chose to plug it with immediate, politically painful measures. The most surprising? Raising employers’ National Insurance contributions by 2p, effective April 2024. It wasn’t just a technical adjustment. It was a signal: growth would be funded by business, not households. That move, according to Productivity.ac.uk’s November 2025 analysis, still “reverberates politically.” Why? Because it hit small businesses hardest, and now, the current government can’t undo it without admitting their predecessor’s plan was flawed — a political liability in a Labour electorate that still remembers the cost-of-living crisis.Then came the freeze on income tax and National Insurance thresholds. Hunt didn’t raise rates — he let inflation do the work. By not adjusting thresholds, millions of workers were pushed into higher tax brackets without a single vote. Analysts on the November 28, 2025 YouTube transcript from UK Fiscal Watch noted dryly: “The government might say we would have frozen tax thresholds next year, but Jeremy Hunt had already done that.” That’s the quiet genius — and cruelty — of fiscal inertia. It’s a tax rise you don’t see coming until your payslip shrinks.
The £40 Billion Paradox
The total £40 billion in tax increases Hunt delivered wasn’t just about numbers — it was about perception. The Office for Budget Responsibility (OBR) had forecasted modest growth. Hunt’s measures were meant to stabilize. But they also locked in a structural imbalance. As Saltus.co.uk pointed out in its November 2025 pre-Budget report, Hunt’s choices occurred against “weak growth, rising debt-servicing costs, and new spending commitments.” Now, those same commitments — including expanded welfare, special educational needs funding, and the two-child benefit cap — are costing more than anticipated. And the Labour government, bound by its manifesto promise, can’t raise income tax, VAT, or NI rates. So what’s left? Cutting spending. Or finding hidden taxes. They’ve chosen the latter.Here’s the twist: Hunt’s earlier cuts to National Insurance — meant to stimulate hiring — are now deemed “unaffordable.” That’s right. The same policy that was sold as pro-growth is now being reversed as fiscally irresponsible. The Productivity.ac.uk report calls this “hyperactive incrementalism” — a series of small, reactive moves without a coherent long-term vision. And now, Labour is stuck cleaning up the mess.
“Did Jeremy Hunt Write This Budget?”
The New Statesman’s November 2025 editorial didn’t mince words: “Did Jeremy Hunt write this Budget?” The question wasn’t rhetorical — it was accusatory. Because despite Labour’s ideological differences, Reeves’ 2025 Autumn Budget, delivered on November 26, 2025, mirrors Hunt’s playbook. More infrastructure spending. More deregulation in eight targeted sectors. More reliance on the OBR’s forecasts — even as those forecasts have evaporated under inflation and global shocks.It’s not policy continuity. It’s policy captivity. Hunt’s fiscal architecture — frozen thresholds, employer NI hikes, unfunded welfare expansions — created a cage. And Labour, despite its rhetoric, is trapped inside. As Hunt himself told reporters on November 28, 2025: “It’s ridiculous to blame my Tory tax cuts for Labour’s economic woes.” But the truth? He didn’t create the problems. He just made them harder to fix.
The Human Cost of Fiscal Inertia
Behind the spreadsheets are real people. A nurse in Birmingham earning £32,500 — just above the frozen threshold — now pays £1,200 more in income tax than she did in 2021. A small business owner in Manchester, who hired two extra staff after Hunt’s 2022 NI cut, now faces a 2p surcharge that eats into her profit margin. These aren’t abstract figures. They’re lived realities.The YouTube analysts Helen, Ben, and Christine noted: “Hunt made choices — to accommodate extra welfare spending, to freeze thresholds — and no one really anticipated how much that would pile up.” That’s the core issue. Hunt didn’t plan for the future. He managed the present. And now, the future is due.
What Comes Next?
The 2026 Budget will be the real test. Will Labour finally break from Hunt’s template? Or will they double down on “incrementalism” to avoid political backlash? One thing’s clear: without a reset of the OBR’s forecasting rules, without a new framework for long-term investment, and without a serious conversation about productivity — not just spending — the UK will keep cycling through the same crisis: tax hikes, frozen wages, and declining growth.As Productivity.ac.uk concluded: “Hunt’s budget failed to recast fiscal rules or entrench a durable growth framework.” That’s not just criticism. It’s a warning.
Frequently Asked Questions
Why is Rachel Reeves raising taxes if Labour promised not to?
Labour pledged not to raise income tax, VAT, or National Insurance rates — but not to avoid tax increases altogether. Jeremy Hunt’s 2024 freezes on tax thresholds meant inflation pushed millions into higher brackets automatically. Reeves is now forced to raise other taxes or cut spending because Hunt’s policies created a £22 billion hole that can’t be ignored without risking economic instability.
How did Hunt’s 2p National Insurance rise affect businesses?
The 2 percentage point increase on employers’ National Insurance hit small businesses hardest, adding an average of £2,100 per employee annually. Many firms scaled back hiring or delayed expansions. Productivity.ac.uk notes this move, while intended to fund the NHS, created a structural cost that now limits the Labour government’s ability to stimulate job growth without violating its own tax pledges.
What role does the OBR play in today’s budget debates?
The Office for Budget Responsibility’s forecasts from March 2024 still anchor current policy. Even though its growth projections have since proven overly optimistic — due to global shocks, inflation, and weak productivity — both Labour and the Conservatives use its numbers to justify spending and tax decisions. Hunt’s reliance on the OBR created a dependency that now constrains Reeves’ flexibility.
Why are tax threshold freezes considered a hidden tax rise?
When income thresholds aren’t adjusted for inflation, people pay more tax even if their real earnings haven’t increased. In 2025, 3.2 million workers were pushed into higher tax bands due to Hunt’s 2024 freeze — effectively a £4.3 billion hidden tax increase. It’s politically invisible, but economically real — and it’s why many now call it “stealth taxation.”
Is there any precedent for a new government being forced to reverse its predecessor’s tax policy?
Yes. In 2010, Labour’s fiscal deficits forced the Conservative-Liberal coalition to implement austerity measures they’d previously opposed. Similarly, in 2025, Labour’s hands are tied by Hunt’s tax freezes and NI hikes — not because they agree with them, but because undoing them would risk market confidence. History shows that fiscal legacies often outlast political ideologies.
What’s the long-term risk of Hunt’s “hyperactive incrementalism”?
The lack of a coherent growth strategy means the UK keeps reacting to crises instead of building resilience. Hunt focused on short-term fixes — infrastructure tweaks, sectoral deregulation — without reforming institutions or investing in skills and innovation. The result? A fragile economy vulnerable to every global shock. Without structural reform, future chancellors will keep facing the same cycle: crisis, tax hikes, and stagnation.
