Jeremy Hunt: The time has come for tax cuts

Jeremy Hunt says: 'We have to show the country there is a path to a lower tax economy'
Jeremy Hunt told The Telegraph: 'We have to show the country there is a path to a lower tax economy' - Geoff Pugh for The Telegraph

Jeremy Hunt has vowed to show Britain there is a path to lower taxes in an exclusive interview ahead of next week’s Autumn Statement.

Speaking to The Telegraph, the Chancellor argued that the economy had “turned a corner”, with inflation halved – and said “this is the moment” to focus on growth.

It is the clearest indication yet that Mr Hunt will unveil both personal and business tax cuts next Wednesday, after months of calls from Tory MPs to do so.

Plans for an inheritance tax cut and an investment tax cut for companies have been developed, with final decisions expected to be taken over the weekend.

The Chancellor also said he was personally uncomfortable with the size of the tax burden, which is forecast to soon hit a 70-year high.

Mr Hunt said: “The big message on tax cuts is there is a path to reducing the tax burden and a Conservative government will take that path.

“It’s not an easy path. There are difficult decisions you have to take to get there.

“But we believe if we’re going to grow the economy, this is going to be an Autumn Statement for growth, then we have to show the country there is a path to a lower tax economy.”

Asked explicitly if tax cuts would be unveiled next week, Mr Hunt said: “Without pre-empting the decisions that the Prime Minister and I make, this is an Autumn Statement for growth. It’s a turning point for the economy.”

The tone of the comments is a marked contrast to the position adopted by Mr Hunt and Rishi Sunak, the Prime Minister, for much of this year, when they repeatedly argued that now is not the time for major tax cuts.

This week, it was confirmed that inflation has halved this year, meaning one of the five pledges the Prime Minister made in January has been delivered.

On Wednesday, Mr Hunt will put boosting long-term economic growth at the heart of his Autumn Statement, potentially the second-last fiscal event before the next general election.

The Chancellor said: “We have turned the corner in a big way this week with the inflation halving,” indicating a significant pivot in economic approach is coming to focus more on growth.

Asked if he was “personally uncomfortable” with the high tax burden, Mr Hunt said: “Yes. Taxes are too high and we need to bring that down. Now we have lower taxes than any major European economy, but that should not be our benchmark.

“Because when you look around the world, the most dynamic, energetic, thriving economies are in North America and Asia, where they generally have lower tax burdens. That should be our benchmark.”

Mr Hunt declined to be drawn on specific tax cuts in the Autumn Statement, but the proposals he and the Prime Minister are considering have been widely reported.

Inheritance tax could be cut. A reduction in the 40 per cent rate, rather than the total abolition, is seen by well-placed figures inside the Government as the more likely option.

Businesses could be granted an extension to so-called “full expensing”, which allows firms to claim back up to 25p for every £1 invested. It would cost around £10 billion a year to make permanent.

A cut to stamp duty has also been considered.

On Friday, Mr Hunt said that there was a need to “reform our welfare system” after he announced the biggest shake-up to benefits in a decade the day before.

Unemployed benefits claimants who refuse to look for a job will be stripped of their right to free prescriptions and discounted bus travel after six months.

People who have still not found a job after 18 months will be forced to take on work or forfeit their benefits.

Mr Hunt has not ruled out using a lower inflation figure than usual to increase working-age benefits.

Typically, ministers use the September figure for inflation, which would mean a 6.7 per cent rise. But they have faced calls to use October’s far lower figure of 4.6 per cent, which would be a real-terms cut for millions.

On Friday, on a visit to a green power company in Sheffield, Mr Hunt also suggested he would introduce plans to improve public sector productivity – saying there was a “big opportunity to improve the efficiency of the state”.

Announcing tax cuts next week could help strengthen Mr Sunak’s standing with Tory MPs after some criticised his sacking of Suella Braverman as home secretary and his proposal for overcoming the Supreme Court’s blocking of Rwanda deportation flights.

It remains unclear how large any tax cuts announced will be, given the Budget next spring, which is closer to the next general election, is expected to deliver a greater tax giveaway. A general election needs to be held by January 2025 at the latest.

An inheritance tax cut next week would mean Labour is pressed to say whether it would match or reverse it, potentially creating the tax election dividing line the Tories are targeting.

Splits were emerging among Conservatives about the move on Friday.

Boris Johnson, the former prime minister, said an inheritance tax cut is “now overdue”. However, Lord Clarke, the former chancellor, said it could trigger “the most appalling criticisms” if poorer people are not also supported financially.

Asked if now was the time to go for economic growth, Mr Hunt said: “Yes, absolutely. This is the moment. We’ve got to go for it as a country and I think we’ve got a big, big opportunity.”

Mr Hunt also insisted in the interview that he would stand as an MP at the next election, despite speculation he would quit given how tight the contest is expected to be as the Liberal Democrats target his seat.

He said: “I’m aware that it’s the fight of my life, but I’m up for that fight. And I’m very confident that I will be back in Parliament after the next election.”

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