Chancellor Jeremy Hunt has not dismissed the possibility of reducing income tax in the Autumn Statement on Wednesday, emphasizing that economic growth is his main priority. As he finalizes the government’s spending plans to stimulate the UK economy, there are considerations of cutting taxes on income or national insurance. Mr. Hunt stated that his speech would concentrate on eliminating obstacles to growth.
Chancellor Jeremy Hunt has refrained from confirming specific financial decisions ahead of the Autumn Statement on Wednesday.
While expressing a desire to lead the UK towards lower taxes responsibly, he emphasized the importance of not compromising progress on inflation. Responding to questions about potential income tax cuts, he maintained a focus on growth as the priority.
Tax levels in the UK are currently at their highest in seven decades, according to the Institute for Fiscal Studies. Some Conservative MPs have urged tax cuts, but Hunt has emphasized the challenging economic conditions.
The Conservative mayor of the West Midlands, Andy Street, expressed a preference for reducing taxes on businesses over cutting inheritance tax. While the chancellor, Jeremy Hunt, had considered an inheritance tax cut, sources indicate that the focus of the Autumn Statement will be on promoting growth, with inheritance tax having minimal impact in this context. Hunt is likely to revisit the issue in the spring budget. He has reportedly ruled out increasing tax thresholds and is considering direct cuts to income tax or national insurance. The Autumn Statement is seen as an opportunity for the government to regain political momentum.
Inflation
The Chancellor, Jeremy Hunt stated that UK inflation has fallen sharply in October to its lowest rate in two years, primarily due to lower energy prices.
The government claims to have met its pledge to halve inflation by the end of the year. However, the Bank of England emphasizes that raising interest rates, which it controls independently, is the most effective way to bring down inflation.
Chancellor Hunt mentioned that the UK is “not out of the woods yet,” but he feels there’s too much negativity about the British economy.
Chancellor Jeremy Hunt remarked that while the UK is “not out of the woods yet,” he believes there’s too much negativity about the British economy. The UK economy has faced challenges, including high energy prices and interest rates, hindering its recovery since the pandemic.
The Bank of England forecasts zero growth until 2025. Chancellor Hunt will base his spending plans on the latest economic forecast from the independent Office of Budget Responsibility (OBR).
As inflation slows, economists estimate the chancellor could have more than £10bn to spend on tax cuts.
Chancellor Jeremy Hunt emphasized that tax cuts are not his only tool and that measures to promote faster economic growth are being considered. One policy already announced aims to reduce the time needed to approve and build electricity infrastructure, such as pylons and overhead cables.
Under these plans, households near new pylons and substations could receive up to £1,000 a year off their energy bills for a decade.
The chancellor aims to signal a new era in which the focus is on economic growth rather than dealing with the worst pressures of inflation.
Benefit alterations
Chancellor Jeremy Hunt has not provided details on potential changes to benefits but stated that the Conservatives, in principle, “don’t believe in parking people in welfare.” The government is reportedly considering significant benefit changes for individuals unable to work due to health conditions. Plans include closing claims for those on Universal Credit if they fail to take steps to find work within six months, with the goal of encouraging people to return to employment.
Labour shadow chancellor Rachel Reeves criticized the government’s welfare plans, attributing the high number of people out of work to the government’s 13 years in power. She highlighted issues with the NHS, stating that people’s lives are on hold due to delays in treatments that could enable them to return to work.
Responding to reports of potential changes in how the government calculates the rate of benefit increases for the next financial year, Reeves emphasized the importance of using the traditionally used inflation rate for benefit increases when in government.
