Britain’s Chancellor of the Exchequer Jeremy Hunt holds his traditional red ministerial box as he leaves 11 Downing Street for the House of Commons to deliver the budget in London on Wednesday. (AP photo)

LONDON (AP) — British Treasury chief Jeremy Hunt sought Wednesday to bolster spirits within his Conservative Party with another tax cut for 27 million working people, hoping it can turn the political dial ahead of a general election this year.

Even though the British economy has hit one definition of recession and public finances will remain stretched over coming years, Hunt used his annual budget statement to announce a reduction in national insurance, which workers pay to qualify for a state pension, by 2 percentage points, to 8%. He hinted at its eventual abolition.

Hunt cut this tax on wages by the same amount in November, meaning that in combination, workers with average earnings will benefit to the tune of around 1,000 pounds ($1,270) a year.

“We will continue to cut national insurance contributions as we have done today so we truly make work pay,” Hunt said.

To the likely disappointment of many of his Conservative peers nervous about losing their seats in the upcoming election, Hunt made no mention of reducing the basic rate of income tax, which would have benefited retirees and savers, too.

Poll after poll show the Conservatives suffering a historic defeat to the main opposition Labour Party.

Labour leader Keir Starmer challenged Prime Minister Rishi Sunak to call an election for May 2, while describing the budget statement as the “last desperate act of a party that has failed.”

The election has to take place by January 2025 but could in theory happen in May alongside local and mayoral elections. Hunt’s boss, Sunak, will ultimately decide when the election will take place as their party tries to extend their leadership, which they have held since 2010.

Sunak has previously said the election was likely to take place in the second half of the year but has kept his options open. If that is the case, he may be working on the assumption that the economic backdrop will be more benign, with a “feelgood” factor emerging alongside higher economic growth, lower inflation and dropping interest rates, with associated mortgage costs on the decline.

Hunt argued that tax cuts were possible as the British economy has withstood a lot the past few years that necessitated big government spending, notably the coronavirus pandemic and the sharp spike in energy prices following Russia’s invasion of Ukraine, which sent inflation soaring and prompted the Bank of England to raise interest rates aggressively.

“We can now help families not just with temporary cost-of-living support but with permanent cuts in taxation,” Hunt said.

In addition to the cut in national insurance, Hunt announced other potentially voter-friendly moves, including freezing taxes on alcohol and gas at the pump and raising the amount of money individuals can earn before they have to pay back a child benefit they receive from the state.

The tax giveaway will be partly paid for by keeping a lid on spending for already cash-starved public services as well as a series of tax increases to take effect at different times over the coming years.

Those tax hikes will affect business class airfares, vapes and oil and natural gas producers, who saw a windfall after Russia’s invasion of Ukraine.

Hunt also abolished “non-domiciled” tax status, which allows some wealthy individuals to avoid paying U.K. taxes. That announcement could be perceived as an attempt to blindside Labour, which has been calling for its abolition to pay for spending at the state-run National Health Service.

“We’ve learned to expect some degree of smoke and mirrors in the budget,” said Paul Johnson, director of the well-respected Institute for Fiscal Studies. “Today was no different.”

Sunak and Hunt have restored a measure of economic stability after the short-lived premiership of Liz Truss, which foundered after a series of unfunded tax cuts roiled financial markets and sent borrowing costs surging.

Truss’ premiership is one of the main reasons Labour is so far ahead in the polls — up to 27 percentage points in one of them. As is often the case, Labour leader Starmer brought up her legacy when accusing the government of being blind to the harsh economic reality facing millions of people.

“As the captain of the Titanic and the former prime minister herself might have said: Iceberg? What iceberg?” he said.

Starmer said the Conservatives had delivered falling living standards, a smaller economy than when Sunak took office in late 2022 and despite Wednesday’s measures, the highest tax burden for 70 years following the worst cost-of-living crisis in decades.

“That is their record, it is still their record, give with one hand and take even more with the other — and nothing they do between now and the election will change that,” he said.