Jeremy Hunt warns of ‘storm’ ahead as he prepares to unveil £24bn of tax rises

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Chancellor’s long-anticipated Autumn Statement to outline £30bn of spending cuts alongside increases in levies

Jeremy Hunt warns of ‘storm’ ahead as he prepares to unveil £24bn of tax rises
Jeremy Hunt pictured leaving his home on Wednesday, as he prepares to unveil £24bn of tax rises and £30bn of spending cuts in the Autumn Statement
Jeremy Hunt pictured leaving his home on Wednesday, as he prepares to unveil £24bn of tax rises and £30bn of spending cuts in the Autumn Statement CREDIT: Andy Rain/EPA-EFE/Shutterstock

Jeremy Hunt will say that Britain must “face into the storm” as he unveils £24 billion of tax rises.

The Chancellor will unveil his “plan for stability, growth and public services” in the House of Commons on Thursday, as he vows to tackle inflation, protect the vulnerable and keep mortgage rates low.

His long-awaited Autumn Statement will include £30 billion of spending cuts – although Mr Hunt will pledge to support core public services such as the NHS, schools and the police.

However, there are rumblings of discontent on the Tory back benches – with one former Cabinet minister saying she would refuse to support tax rises unless Mr Hunt scraps the expensive HS2 rail link.

Unveiling his plan, the Chancellor is expected to tell MPs: “The British people are tough, inventive, and resourceful. We have risen to bigger challenges before.

“We aren’t immune to these global headwinds, but with this plan for stability, growth and public services, we will face into the storm”.

Tax rises equivalent to £860 for every home

The NHS is expected to be handed more money to help deal with high inflation and a huge Covid backlog, although it will be less than the £7 billion it had demanded.

It comes despite a warning from the National Audit Office that the NHS has become less productive since the pandemic, amid high staff sickness levels and an increasing refusal to work overtime.

The £24 billion of tax increases, which is equivalent to £860 for every household in the country, are understood to be largely made up of freezing tax thresholds.

Personal tax thresholds are set to be frozen, as well as the thresholds for other income tax and National Insurance rates. 

The stealth raid means hundreds of thousands of people will pay tax for the first time or will be dragged into higher rates.

The threshold for top 45 per cent rate income tax payers will be cut from £150,000 to as low as £125,000.

Other thresholds, such as the rate at which businesses have to register for VAT, inheritance tax, capital gains tax and the pension lifetime allowance, are also set to be frozen.

Town halls will be given the power to increase council tax by up to five per cent without holding a referendum. This could add up to £100 on typical bills, with average bills topping £2,000 a year for the first time.

The windfall tax on oil and gas giants is expected to be increased and widened to electricity generators.

But the energy bill support package unveiled by Liz Truss, the former prime minister, is expected to be made less generous from April – with the price cap raised and handouts targeted at pensioners and those on benefits.

While Mr Hunt is also likely to confirm that benefits and state pensions will rise in line with inflation, he is likely to delay the introduction of Boris Johnson’s lifetime cap on social care costs.

On Wednesday, it was reported that Mr Hunt will also announce a multi-billion pound plan to insulate homes and upgrade boilers in a drive to cut Britain’s energy demands.

The scheme is understood to involve the establishment of a new taskforce, which will include new funding from 2025 to 2028. It will run a public information campaign to encourage individuals and firms to reduce their consumption.

Illustrator Embed

Where Hunt could increase taxes

Estimated fiscal impact of possible tax rises

Health and social care levy

1p income tax rates rise

Scrap tax reliefs

Abolish non-dom regime

Remove capital gains uplift

One year income tax/NI threshold freeze

Private school fees VAT

Scrap lifetime ISAs

End tax-free inherited pensions

£bn

0

4

8

12

16

Health and social care levy

1p income tax rates rise

Scrap tax reliefs

Abolish non-dom regime

Remove capital gains uplift

One year income tax/NI threshold freeze

Private school fees VAT

Scrap lifetime ISAs

End tax-free inherited pensions

£bn

0

4

8

12

16

Health and social care levy

1p income tax rates rise

Scrap tax reliefs

Abolish non-dom regime

Remove capital gains uplift

One year income tax/NI threshold freeze

Private school fees VAT

Scrap lifetime ISAs

End tax-free inherited pensions

£bn

0

4

8

12

16

Health and social care levy

1p income tax rates rise

Scrap tax reliefs

Abolish non-dom regime

Remove capital gains uplift

One year income tax/NI threshold freeze

Private school fees VAT

Scrap lifetime ISAs

End tax-free inherited pensions

£bn

0

4

8

12

16

SOURCE: RESOLUTION FOUNDATION

It comes as a Telegraph investigation revealed that the Government wasted £14 billion of taxpayers’ money on items such as luxury villas and vegan ice cream.

Some Tory MPs have questioned whether Mr Hunt’s tax rises are necessary.

On Wednesday Esther McVey, the former work and pensions secretary, told MPs she would not vote for tax rises until the “unnecessary vanity project” of HS2 is scrapped.

Simon Clarke, the former levelling up secretary, refused to guarantee that he would vote for measures in the Autumn Statement – saying: “We have to see what the package is but I always do my best to support the Government, and I very much hope I can.

“I hope they will strike a balance which leans much more to spending reductions than tax rises to balance the books.”

Michael Fabricant, a Conservative MP and another strong critic of HS2, said: “I think many MPs will think twice about supporting tax rises whilst still spending £150 billion on a rail service does not appeal to many.”

Jacob Rees-Mogg, the former business secretary, said the Treasury “need to look at HS2 as I doubt it is value for money” – although he said he would not vote against tax rises.

Mr Hunt will insist that his plan represents British values of honesty, fairness and compassion, because those with the broadest shoulders will pay the most and the vulnerable will be protected.

The Chancellor will promise to be “honest about the challenges, and fair in our solutions”, and will pledge to “protect the vulnerable, because to be British is to be compassionate”.

And he will say the tough measures he will introduce are vital to tackle the scourge of inflation, which on Wednesday soared to a 41-year high of 11.1 per cent.

Illustrator Embed

Inflation in Britain is second worst in G7

Year-on-year inflation

15

%

Italy

UK

10

Germany

US

Canada

France

5

Japan

0

-5

Apr

2021

Jul

Oct

Jan

2022

Apr

Jul

Oct

15

%

Italy

UK

10

Germany

US

Canada

France

5

Japan

0

-5

Apr

2021

Jul

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2022

Apr

Jul

Oct

15

%

Italy

UK

10

Germany

US

Canada

France

5

Japan

0

-5

Apr 2021

Jul

Oct

Jan 2022

Apr

Jul

Oct

15

%

Italy

UK

10

Germany

US

Canada

France

5

Japan

0

-5

Apr 2021

Jul

Oct

Jan 2022

Apr

Jul

Oct

SOURCE: BLOOMBERG

Breakout Box

Which household prices are growing the fastest?

Year-on-year CPI inflation to November 2022

Office for National Statistics, November 2022

Expand to read more

“High inflation is the enemy of stability,” he will say.

“It means higher mortgage rates, more expensive food and fuel bills, businesses failing and unemployment rising.

“It erodes savings, causes industrial unrest, and cuts funding for public services. It hurts the poorest the most and eats away at the trust upon which a strong society is built.”

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He will add: “We are taking a balanced path to stability – tackling the inflation that eats away at a pensioner’s savings and increases the cost of mortgages to families, at the same time supporting the economy to recover. But it depends on taking difficult decisions now.”

In his speech, the Chancellor will argue that balancing the books is key to economic stability, as it shows the UK is a country which pays its way and helps tackle inflation.

And he will say that to support the Bank of England’s mission to drive down inflation, the Government needs to play its part by taking responsible decisions with the public finances, limiting the need for further rises in interest rates.

The Chancellor will say: “We are taking difficult decisions to deliver strong public finances and help keep mortgage rates low, but our plan also protects our long-term economic growth.”

The Chancellor will point out that the global economy has faced two enormous shocks in the pandemic – which has crippled supply chains, slowed growth and increased debt levels – and Vladimir Putin’s war in Ukraine, which has caused energy prices to increase at a rate not seen since the 1973 oil crisis that drove the global economy into a recession. Both are contributing to rising inflation.

He is expected to say: “The Bank of England has my wholehearted support in its mission to defeat inflation … but we need fiscal and monetary policy to work together. 

“Families across Britain make sacrifices every day to live within their means, and so too must governments because the United Kingdom will always pay its way.”

Long-awaited independent forecasts from the Office for Budget Responsibility will also be published on Thursday. They are expected to detail bleak prospects for an economy teetering on a recession.

Mr Hunt’s package will stand in stark contrast to his predecessor Kwasi Kwarteng’s unfunded splurge of tax cuts less than two months ago, which further dented the UK’s finances.

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