JEFF PRESTRIDGE: The welcome return of (pale blue) conservatism… We at last saw a glimpse of what a Conservative government, true to its principles, should always stand for

What a relief. Yesterday, after three years of depressing austerity and an attack on our take-home pay, we finally saw a glimpse of what a Conservative government, true to its principles, should always stand for: rewarding hard-working people by freeing them from the curse of heavy taxes .

The announced tax cuts, aimed at reducing National Insurance (NI) contributions, are not spectacular in themselves. So there is a two per cent reduction in the NI rate for 27 million workers, equivalent to an annual tax saving of £450 for someone on an average salary of £35,400.

The country’s army of self-employed people will also see their NI contributions fall – with the headline rate they pay reduced from nine to eight per cent. Two million risk-taking entrepreneurs will benefit from this.

Small beer? Yes, but in the government’s defense these cuts are bigger than we were led to believe (a one per cent cut in the NI rate was mooted earlier this week) and in the case of employee contributions the cuts will come into effect very quickly . , from January next year, as opposed to the start of the next tax year in April.

While these cuts represent a small financial step for humanity, the signal they send is critical. They point to a welcome change of direction from Chancellor of the Exchequer Jeremy Hunt, whose middle name since becoming head of the Treasury 13 months ago has been ‘Frugal’.

It no longer seems his priority to tax us all to the hilt to get the country’s finances back on track.

Happy with the way government borrowing is under control, it seems that the worst pain inflicted on our household finances – after the pandemic and after the collapse of the financial markets last October – is over.

Better times are ahead, although we should not forget that tax rates in this country are still punishing, while the cost of living continues to rise and mortgage interest continues to eat up family income.

Perhaps the Chancellor’s change of direction has come too late to save the government at the next general election, but conservatism (a pale shade of blue instead of dark blue) is finally back.

The drumbeat sounds loud and clear: hard work, instead of wallowing in benefits at home, will be rewarded. What is crucial is that Mr Hunt builds on the seeds planted yesterday when he next budgets in March.

The punitive freeze on personal allowances and tax rates – amounting to a £40 billion annual stealth tax – must end sooner or later.

Better times are ahead, although we should not forget that tax rates in this country remain punitive, while the cost of living continues to rise and mortgage interest continues to eat up family income (Stock Photo)

Encouraging more and more people (particularly pensioners) to pay tax – or more tax as they move into higher income tax brackets – is something you would expect from a Labor government, but not from a Conservative government. It must come to a stop.

There should also be a reduction in the basic income tax rate – from 20 to 19 percent, perhaps even lower.

In addition, inheritance tax, which is widely reviled and expected to raise the Treasury £7.6 billion in the current tax year, should take the hit. One final thought on yesterday’s autumn statement, delivered with a touch of flair by Mr Hunt (soot, not sparing this time).

The Chancellor has done the right thing by increasing the state pension by 8.5 percent, in line with the ‘triple lock’ promise – which stipulates that the pension must rise every April at the highest rate of inflation, average income growth or 2.5 per cent.

It means that those receiving the new state pension will receive £221.20 per week from April next year, while pensioners on the older version of the basic rate will get £169.50.

The promise was broken last fiscal year after the pandemic for affordability reasons. To redo it or to tinker with it would seem like political suicide.

The Conservatives have turned a corner. As the economy grows, it is vital that more of our hard-earned money ends up in our pockets and not the Chancellor’s.