Autumn Statement: Jeremy Hunt takes aim at Labour over growth
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Jeremy Hunt outlined a devastating £55billion plan for tax hikes and public spending cuts as he warned Britain must “face into the storm” to get the economy growing again. Delivering his Autumn Statement in the House of Commons the Chancellor warned the independent Office for Budget Responsibility (OBR) indicated the UK is already in recession.
“UK, like other countries, is now in recession. Overall this year, the economy is still forecast to grow by 4.2 percent,” he said.
“GDP then falls in 2023 by 1.4 percent, before rising by 1.3 percent, 2.6 percent, and 2.7 percent in the following three years.”
Striking a businesslike tone Mr Hunt told MPs today he would take a three-pronged approach to “tackle the cost-of-living crisis” and “rebuild our economy”.
He promised “stability, growth and public services” would be his priorities and the Government would look after the most vulnerable in society.
In a victory for the Express, the Chancellor pledged to maintain the state pension triple lock, as well as to increase the benefits in line with inflation, and to maintain support for those struggling with energy bills.
However, his plans will also see Britons forced to pay more in taxes “but those with the broadest shoulders” paying the most.
In total, Mr Hunt set out a package of around £30billion in spending cuts and £24billion in tax rises over the next five years.
Blaming the Conservative party for the economic crisis, Labour’s Rachel Reeves accused the Government of having “forced our economy into a doom loop where low growth leads to higher taxes, lower investments and squeezed wages”.
She said Liz Truss and Kwasi Kwarteng were responsible for “12 weeks of Conservative chaos” within “12 years of Conservative economic failure”.
But defending the plans set out by his predecessor two months ago, Mr Hunt said: “I understand the motivation of my predecessor’s mini-budget and he was correct to identify growth as a priority.
But unfunded tax cuts are as risky as unfunded spending.”
He added: “We want low taxes and sound money. But sound money has to come first because inflation eats away at the pound in people’s pockets even more insidiously than taxes.
“So, with just under half of the £55 billion consolidation coming from tax, and just over half from spending, this is a balanced plan for stability.”
Speaking for almost an hour in the House of Commons, Mr Hunt’s main announcements included:
1) State pension triple lock to stay
Just days after Mr Sunak entered No10, there were fears he was ready to ditch the Tory party’s 2019 manifesto pledge of increasing the state pension each year by the highest out of inflation, average earnings or 2.5 percent.
However, after more than 300,000 people joined an Express crusade to force the Government to stick by its promise Mr Hunt today confirmed the triple lock would remain in place.
“The cost-of-living crisis is harming all pensioners,” he told MPs. “Because we have taken difficult decisions elsewhere in this statement, I can today announce that we will fulfil our pledge to the country to protect the pensions triple-lock.”
2) Benefits to rise with inflation
For weeks Tory backbenchers have been vocal in demanding the government commit to increasing benefits in line with inflation.
The issue was first raised when Ms Truss was still at the helm, with dozens of party’s MPs warning they were facing electoral disaster if they did not look after those most in need.
Bowing to the pressure, Mr Hunt said: “Today I also commit to uprate such benefits by inflation with an increase of 10.1 percnet, that is an expensive commitment costing £11billion.
“But it means 10 million working-age families will see a much-needed increase next year.
“On average, a family on universal credit will benefit next year by around £600. And to increase the number of households who can benefit from this decision I will also increase the benefit cap with inflation next year.”
He added extra resources would be put in to help get more people off universal credit, with 600,000 more claimants required to meet a “work coach” once a week.
3) Energy bills price cap rises to £3,000
Energy bills are set to rise again next year, with Mr Hunt increasing the cap of the energy price guarantee.
At present the cap means the average household will pay £2,500 a year but the rate will now increase to £3,000 from April.
However, he added there would be extra support for the most vulnerable, with additional cost-of-living payments next year of £900 to households on means-tested benefits, £300 to pensioner households, and £150 for individuals on disability benefit.
4) Increase in personal taxes
Mr Hunt outlined a number of changes to personal taxes to help claw back money.
Just weeks after Mr Kwateng announced plans to reduce the 45p tax rate, his successor confirmed that it was not only staying but that the threshold upon which it is paid will be reduced from £150,000 to £125,140.
At the same time the income tax personal allowance, higher rate threshold, main national insurance thresholds and inheritance tax thresholds will be frozen until April 2028.
With inflation surging, it means Britons are likely to end up paying more in tax in real terms.
The tax-free allowance for capital gains will also reduce in 2023-24 from £12,300 to £6,000 and again to £3,000 in 2024-25.
5) New windfall tax on energy firms
Earlier this year Mr Sunak announced a windfall tax on the profits of oil and gas producers to help pay for the Government’s help with household energy bills.
Labour has spent months demanding the Government extend the windfall tax to pay for further support.
Despite previous protests from the Conservatives that they disagree with windfall taxes, Mr Hunt confirmed energy suppliers would be hit harder than originally planned.
“I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices,” he said.
“But any such tax should be temporary, not deter investment and recognise the cyclical nature of many energy businesses.”
He hopes the windfall taxes can raise around £14billion for the Treasury next year.
6) Fast-tracked regulation reforms to make the most of Brexit
Making the most of Britain’s Brexit freedoms, the Chancellor said he wanted to deliver “smart regulatory reform” to help boost UK growth.
He said by the end of next year the Government will review and decide changes to EU regulations in five growth industries – named as digital technology, life sciences, green industries, financial services and advanced manufacturing.
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