Hunt: We must all face the economic storm together
BRITAIN must ‘face into the storm’ of a global downturn, Jeremy Hunt will warn today – as he prepares to deliver one of the most brutal Budgets in modern history.
The Chancellor will call for ‘sacrifices’ to bring down inflation, which yesterday jumped to a 41-year high of 11.1 per cent.
Mr Hunt will unveil a £54billion package of tax rises and spending cuts designed to convince the financial markets that ministers are serious about bringing Britain’s towering debts under control.
The Chancellor, who raised taxes by £32billion last month, will announce a further £24billion in hikes today, taking the overall tax burden to a new post-war record. The raid will be skewed towards higher earners, but Treasury sources said ‘all’ taxpayers will face higher bills.
The tax bomb – equivalent to £854 per household – will be accompanied by £30billion of real terms public spending cuts, with rises of just 1 per cent pencilled in for the three years after the next election.
A string of immediate projects also look set to get axed or delayed, including the Government’s flagship cap on social care costs.
Mr Hunt will tell MPs that ministers have to take ‘difficult decisions’ now to tame inflation, which he describes as ‘the enemy of stability’.
He will say: ‘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.’
He will warn that the UK faces ‘a global energy crisis, a global inflation crisis and a global economic crisis’. However, he will add: ‘But 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.’
The Chancellor will say that, just as families ‘ make sacrifices every day to live within their means, so too must governments because the UK will always pay its way’.
However, Mr Hunt will insist the package is ‘fair’ and ‘compassionate’ and pledge to ‘protect the vulnerable’.
Pensions and benefits will both rise in line with the September inflation figure of 10.1 per cent, raising the state pension by £18.70 to £203.85 a week. Despite the squeeze, the NHS will be handed billions more to get through this winter as part of plans to protect ‘core services’ like health,
‘Difficult decisions to tame inflation’
education and the police. And Mr Hunt will pledge to continue energy bill support for all households next year, but at a much less generous rate.
The Chancellor’s warning came as: n The Office for Budget Responsibility was expected to announce that the UK is entering recession.
■ Official figures showed food prices rising at 16.2 per cent – the fastest since the 1970s.
■ Former ministers Esther McVey and Simon Clarke said they may not vote for the Budget if tax rises go too far.
■ Bank of England Governor Andrew Bailey warned that further interest rate rises are coming down the track despite the cost of living squeeze.
■ Mr Hunt was preparing to unveil plans for a major scheme to help people insulate their homes.
■ Defence Secretary Ben Wallace urged the Chancellor not to slash military spending.
■ PM Rishi Sunak vowed to publish his tax return, but said he would not reveal details of the finances of his heiress wife. Mr Sunak was flying back from the G20 Summit in Bali last night ahead of today’s Budget statement, which is expected to begin at 11.30am. He said earlier the UK’s ‘insidious’ inflation had to be ‘ gripped’ and was now his ‘absolute No1 priority’.
Mr Hunt’s ‘fiscal tightening’ is designed to ensure he can show that Britain’s debts will begin to fall as a proportion of gross domestic product in five years’ time.
Income tax thresholds will be frozen for six years, dragging millions of workers into higher bands. Thresholds for national insurance, inheritance tax and tax-free pension savings will also be frozen.
High earners will see the starting point for paying the 45p rate slashed from £150,000 to £125,000, dragging another 250,000 into the top rate. Mr Hunt will also unveil plans for a major increase in the windfall tax on energy companies.
■ England’s largest county is set to become the first in the country to double council tax for second-home owners.
The move by North Yorkshire County Council is intended as a ‘first step’ to help areas where locals can no longer afford to live or work due to a boom in holiday homes and lets.
TODAY’S Budget will be the third set piece from a chancellor in a year. And thanks to the usual round of leaks, it’s clear it will be one of the most brutal in history.
Jeremy Hunt wants to rebuild the Tories’ reputation for fiscal responsibility with spine-chilling tax rises and spending cuts.
But if he throws the baby out with the bathwater after the mini-Budget shambles, he risks worsening the looming recession.
The Tories are meant to be the party of low taxes, small state, high growth, industriousness and ambition. If there is nothing in his statement to encourage that, what will be the point of voting for them?