Tax cuts allow cautious Chancellor to create some headaches for Labour

We've taken a look at the most important conflict of the general election campaign.

The battle for economic credibility

This was a Budget in which the Chancellor tried to portray himself as the careful and cautious guardian of the economy.

The reduction in National Insurance, combined with the same reduction a few months ago, amounts to a significant tax cut.

But there was little surprising in what Jeremy Hunt said, no fireworks likely to immediately change the Conservatives' prospects.

Instead, Hunt is trying to make the case that the economy is slowly but surely recovering.

In my interview with him, for example, he suggested that middle-income earners would be better off when you compare National Insurance cuts with those frozen tax thresholds that have led to huge tax rises for many people.

But the next big economic argument is broader than that. It takes into account inflation, mortgage costs, rent, and income per capita.

As the statistics circulate in the coming days, there is something more important underneath: sentiment. Do people feel better off, do they feel they have more disposable income, and do they feel economically confident about the future?

These three questions frame the political debate between the Conservatives, Labor and others over the economy.

Labor feel they have clawed their way back into being taken seriously by many on the economy again, and there is evidence from opinion polls to back this up.

What is often seen as Labour's Achilles' heel is what they now hope will be an asset, not least because they believe more and more people feel they are worse off under the Conservatives.

Conversely, for the Conservatives, what was often a strength for them has now become a weakness – the economy – as they have overseen the turmoil of recent years.

Many would accept that most of these disruptions were completely beyond their control: the pandemic and the war in Ukraine, both of which resulted in massive public spending to support households and businesses for which many were very grateful.

We can now see the consequences of this spending in tax rates and the national debt, among other things.

But Labor is also keen to place some of the blame squarely on the Conservatives. “Where's Liz? Where's Kwasi?” Labor MPs shouted during their budget speech.

Representative questions of a political nature: Labor wants to remind people that the former Prime Minister and the former Chancellor caused an economic disaster with real consequences.

Jeremy Hunt, contrary to what he has advertised, is trying to set the tone: he told me he would like to abolish National Insurance altogether.

Now this might be like you or I saying we would like to win the lottery: what we would like to do and what is likely to happen are not the same thing. Repealing it would cost a fortune.

But it is an indication of ambition, and an attempt to identify points of difference between the Conservatives and the Labor Party.

Can he do enough to start tempting people to think again about switching to Labour?

Polls indicate he has a big job on his hands.

At the same time, Labor is aware that it loses far more elections than it wins, and is trying to appear reassured to floating voters.

So they have agreed to much of what this Government has announced, both in the Budget and over the last six months, including much of what was in the Budget.

Which now leaves them with a headache – how to pay for some of their promises, after they accepted the Chancellor's tax cuts.