Tag: hunt

Categories
-Top News UK News

Hunt to deliver budget on March 6  

The choice of March 6 leaves open the possibility that Prime Minister Rishi Sunak could call a general election shortly afterwards, with a polling day coinciding with local elections on May 2…reports Asian Lite News

Chancellor Jeremy Hunt has announced that the 2024 Spring Budget will be held on March 6, leaving the door ajar for a possible early general election in May.

Hunt is expected to announce pre-election tax cuts at the Budget, creating what he hopes will be a dividing line with Labour and a signal that Britain is moving into better economic times.

The choice of March 6 leaves open the possibility that Prime Minister Rishi Sunak could call a general election shortly afterwards, with a polling day coinciding with local elections on May 2.

However Downing Street insiders say Sunak is most likely to call an election in the autumn. “It will give more time for lower inflation, tax cuts and — hopefully — lower interest rates to feed through,” said one.

An election takes place 25 working days after the dissolution of parliament, which means Sunak would have to announce a May 2 poll in the week starting March 25. An election must be held by January 2025.

However with opinion polls showing the Conservatives trailing Labour by an average 19 points, many Tory MPs believe Sunak will play it long and hope to persuade voters during the course of next year that the economy is moving in the right direction.

The latest gross domestic product figures showed the British economy was flatlining, but Hunt told the Financial Times last week that 2024 was the year “when we need to throw off our pessimism and declinism”.

He added: “There’s a reasonable chance that if we stick to the course we’re on, we’re able to bring down inflation, the Bank of England might decide they can start to reduce interest rates.”

On Wednesday the chancellor launched the Budget process when he commissioned the Office for Budget Responsibility, the fiscal watchdog, to prepare an economic and fiscal forecast to be published on March 6.

The forecasts will be critical because they will show how much “headroom” Hunt will have if he is to meet his fiscal rule of bringing debt down as a share of GDP in the fifth year of the forecast.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, noted last week that the chancellor had headroom of £13bn at the time of his Autumn Statement last month.

He said this could double if the recent falls in gilt yields and bank rate expectations were sustained. The rate currently stands at 5.25 per cent but markets expect it to fall sharply next year.

Tory insiders say Hunt will “max out” whatever headroom for Budget tax cuts, and that he is likely to prioritise income tax cuts as a pre-election signal to voters. A cut to the 20p basic rate and a rise in the threshold at which the 40p rate kicks in are among the options.

The overall tax burden is at present the highest since the second world war and Sunak wants to go into an election arguing that taxes are now on a downward path after the shocks of Covid-19 and the Ukraine war.

Labour insists that any spending plans would fit within the party’s fiscal rules, which also target falling debt within five years.

A party spokesperson said: “Labour will ramp up investment in jobs and energy independence through our green prosperity plan to £28bn a year as planned in the second half of the parliament. All of our policies are subject to our fiscal rules.”

ALSO READ-ECP Bans Pak Govt Staff From Participating in Poll Activities

Categories
-Top News

Hunt cuts National Insurance as tax burden rises

Hunt said he would cut the main rate of national insurance by 2 percentage points to 10% from Jan 6 at a cost of about £9bn…reports Asian Lite News

Chancellor Jeremy Hunt has cut business and personal taxes by £20bn in an Autumn Statement aimed at boosting growth, but the UK’s budget watchdog warned that overall taxes are still rising to a postwar high.

The independent Office for Budget Responsibility shed a harsh light on Hunt’s fiscal plan, saying it would provide only “a modest” boost to growth and would see the tax burden rise for each of the next five years.

In a highly political statement on Wednesday, Hunt said he would cut the main rate of national insurance by 2 percentage points to 10 per cent from January 6 — the start of what is expected to be an election year — at a cost of about £9bn.

The other big measure saw the chancellor make permanent the “full expensing” capital allowance regime, at a cost rising to £11bn, which he described as “the largest business tax cut in modern British history”.

The timing of the national insurance cuts — benefiting 27mn working people — prompted speculation the government wants to leave open the option of a spring general election if its dire opinion poll ratings improve.

But the OBR said the tax cuts were dwarfed by the impact of the government’s freeze on tax thresholds between 2022-23 and 2028-29; it said nearly 4mn more people would end up paying income tax for the first time and 3mn more would move to the higher rate.

“While personal and business tax cuts reduce the tax burden by half a percentage point, it still rises in each of the next five years to a postwar high of 38 per cent of GDP,” the fiscal watchdog said.

Rachel Reeves, shadow chancellor, accused the government of presiding over record tax rises because of such “fiscal drag”, but did not commit Labour to opposing any of Hunt’s policy measures. Sir Ed Davey, Liberal Democrat leader, called the Autumn Statement “a hoax”.

The OBR also cut its forecast for economic growth and warned that the Autumn Statement’s measures to kick-start the economy would provide only “a modest boost to output of 0.3 per cent in five years”.

The chancellor had opted to leave government departmental spending “broadly unchanged”, the OBR said, reducing borrowing by £27bn compared with prior forecasts but leaving budgets squeezed.

Hunt said he would set a new target to keep public spending growth below overall economic growth “while always protecting services”.

Hunt claimed that, with inflation falling to 4.6 per cent and the OBR showing that debt was on a sustainable path, it was time to take the foot off the fiscal brake.

“Our plan for the British economy is working but the work is not done,” the chancellor said, as he set out 110 supply-side measures, intended to boost business, bring the sick back to work and get more capital flowing into the economy.

The full expensing of capital investment, which was due to expire in 2026, allows a company to immediately deduct all of its spending on IT equipment, plant or machinery from taxable profits. Extending it was a priority for business groups.

The chancellor said the measures would increase business investment in the economy by about £20bn a year within a decade and were “a decisive step towards closing the productivity gap with other major economies”.

The OBR said it expected the economy to grow 0.6 per cent this year and 0.7 per cent next year. This compares with the watchdog’s previous forecasts of a 0.2 per cent contraction this year and 1.8 per cent growth in 2024. The Bank of England expects growth to remain flat next year.

The chancellor confirmed that the state pension would rise by 8.5 per cent in April and that universal credit and other benefits would increase by 6.7 per cent, in line with September inflation, rather than the lower October level.

The OBR forecast that living standards, as measured by real household disposable income per person, would be 3.5 per cent lower in 2024-25 than their pre-pandemic level.

“While this is half the peak-to-trough fall we expected in March, it still represents the largest reduction in real living standards since Office for National Statistics records began in the 1950s,” it said.

Hunt also promised measures “to unlock the building of more homes” in the UK, which has consistently fallen short on government housebuilding targets.

These include a plan to refund planning fees if local authorities take too long to handle applications and £32mn to “bust the planning backlog”. Hunt also said he would freeze duty on alcohol, a move applauded by the industry.

ALSO READ-Hunt to claim economy is ‘back on track’

Categories
-Top News UK News

Hunt to claim economy is ‘back on track’

The government is also hoping to incentivise work by shaking up the welfare system and increasing the national living wage, which will rise from £10.42 to £11.44…reports Asian Lite News

Jeremy Hunt will claim the economy is “back on track” in an autumn statement that is expected to prioritise tax cuts and economic growth.

The chancellor is expected to say the government’s plan for the economy is “working” but “the work is not done” as he unveils measures to boost business investment by £20bn a year, cut tax and get more people into work.

Hunt will also set out decisions to grow the economy, reduce debt and return inflation to the Bank of England target of 2% – building further on Mr Sunak’s pledge to halve inflation by the end of the year.

After keeping coy about the prospect of tax cuts, they now appear to be firmly on the table as Hunt vows to “reject big government, high spending and high tax because we know that leads to less growth, not more”.

But Labour’s shadow chancellor Rachel Reeves claimed the Tories were the party of “high tax”, adding: “Nothing the chancellor says or does in his autumn statement can change their appalling record.” The hint of tax cuts comes after a Sky News poll of polls put the Tories 20 points behind Labour,

This is a worse margin than where Rishi Sunak was at the start of the autumn, when the Conservatives were an average of 18 points behind.

Among the key measures expected to be announced is a possible cut to national insurance contributions.

The government is also hoping to incentivise work by shaking up the welfare system and increasing the national living wage, which will rise from £10.42 to £11.44 from April and will benefit workers aged 21 and over, rather than 23 and over.

It will mean an £1,800 annual pay rise next year for a full-time worker on the living wage, while 18 to 20-year-olds will receive a £1.11 hourly rise to £8.60.

Hunt is expected to say in his statement: “After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track.

“We have supported families with rising bills, cut borrowing and halved inflation. The economy has grown. Real incomes have risen. Our plan for the British economy is working. But the work is not done. Conservatives know that a dynamic economy depends less on the decisions and diktats of ministers than on the energy and enterprise of the British people.”

In total the chancellor is expected to announce 110 different growth measures for businesses, including plans to cut tax, remove planning red tape and speed up access to the national grid.

Meanwhile, there will also be support for entrepreneurs to raise capital policies to unlock foreign direct investment and to boost productivity.

“Taken together we will increase business investment in the UK economy by around £20bn a year over the next decade and get Britain growing,” Mr Hunt will say.

The chancellor is expected to take advantage of headroom in the public finances – created as a result of higher wages and the freeze in income tax thresholds – to reduce taxes while also sticking to his fiscal rules.

They dictate that the government should have debt falling in the fifth year of the economic forecast and that borrowing should be less than 3% of gross domestic product (GDP).

Former home secretary Dame Priti Patel expressed her desire to see tax cuts. “This government has got the highest tax take in 70 years,” she said.

“I am an absolute advocate of making sure that hard-pressed taxpayers can keep more of their money. And you know, that is through tax cuts. And there are ways in which that can be achieved through targeted tax cuts, such as addressing the conundrum of fiscal drag where so many more people get dragged into the higher tax.”

Hunt will also pledge to “reform welfare” in the autumn statement after already confirming a £2.5bn Back to Work plan, which aims to bring 1.1 million people back in the workforce.

Measures in the plan including removing benefits such as free prescriptions and legal aid from job seekers who are judged not to be looking for work.

Reeves said: “After 13 years of economic failure under the Conservatives, working people are worse off. “Prices are still rising in the shops, energy bills are up and mortgage payments are higher after the Conservatives crashed the economy. The 25 Tory tax rises since 2019 are the clearest sign of economic failure, with households paying £4,000 more in tax each year than they did in 2010. The Conservatives have become the party of high tax because they are the party of low growth. Nothing the chancellor says or does in his autumn statement can change their appalling record.”

ALSO READ-Hunt hints at inheritance tax cut

Categories
-Top News Economy UK News

Hunt hints at inheritance tax cut

The chancellor had been expected to hold off from cutting taxes until next year as he and Rishi Sunak continue to focus on reducing inflation..reports Asian Lite News

Jeremy Hunt is considering slashing the UK inheritance tax rate in next week’s autumn statement after economic forecasters told the chancellor he would have more money to spend thanks to rising tax revenues and falling borrowing costs.

Hunt is weighing up big cuts to the tax people pay after inheriting wealth, paid for in part by better than expected government spending forecasts and by raising benefits by less than expected.

The chancellor had been expected to hold off from cutting taxes until next year as he and Rishi Sunak continue to focus on reducing inflation.

But after UK inflation fell further than expected last month and with Tory MPs clamouring for a pre-election giveaway, sources say the chancellor is open to the idea of doing it sooner.

“Cutting inheritance tax is an option being considered, but it all depends on affordability,” said one person who has been briefed on the options under consideration.

Officials at the Office for Budget Responsibility (OBR) will present their forecasts to the chancellor on Friday for how much “headroom” he has to spend on giveaways without breaking his own fiscal rules.

In the spring the OBR said he could spend an extra £6.5bn and still have debt falling as a proportion of gross domestic product in five years’ time. The Resolution Foundation thinktank has predicted that could now be £13bn, although reports suggest it could be even higher.

Hunt is also considering raising extra revenue by putting benefits up by 4.6% to keep up with October’s inflation figures, rather than 6.7%, which would be in line with September’s figures. This change could save ministers £2bn but would hit an estimated 9m households and cost single mothers an estimated £218 a year.

Hunt and the prime minister have been under pressure for months to use the autumn statement to cut taxes, a move many Tory backbenchers believe will help the party erode some of Labour’s 20-point lead in opinion polls. This week the Conservatives fell to just above 20% in the polls, a level not seen since the aftermath of Liz Truss’s disastrous “mini-budget”.

Nadhim Zahawi, a multimillionaire former Conservative chancellor, has led a campaign to abolish the tax, calling it “the other spectre that haunts us alongside death”.

Hunt is open to the idea of a cut partly because inheritance tax is highly unpopular with Conservative voters and partly because it would cost less than cutting income tax. The Times reported on Friday he was considering reducing the rate from 40% to either 30% or 20%, with a promise to abolish it altogether in the next Tory manifesto.

The Institute for Fiscal Studies has said abolishing inheritance tax would cost an estimated £7bn a year, half of the benefit of which would be enjoyed by people inheriting estates worth £2.1m or more. The potential loss to the Treasury rises to almost £15bn a year by 2032.

The chancellor is also reported to be considering extending tax cuts for businesses that allow them to claim back what they spend on new machinery and office equipment in tax allowances. Hunt said in the spring that he would allow “full expensing” for a trial period of three years, but is now said to be prepared to make the scheme permanent.

XXX

Inflation slows to 4.6%

XXX

Meanwhile, inflation fell sharply in October to its lowest rate in two years, largely due to lower energy prices. Inflation, which measures the rate at which consumer prices rise, dropped to 4.6% in the year to October, down from 6.7% the month before.

The government says its pledge to halve inflation by end of the year has been met early. But there is a limit to how much credit ministers can take for the fall as energy prices settle.

Economists have said the main reason inflation has fallen from its peak of 11.1% in October 2022 is due to a fall this month in the energy price cap, which limits what suppliers can charge consumers per unit of energy. They also note the Bank of England’s decision to raise interest rates, in a bid to cool demand in the UK economy and slow price rises.

Rates are currently at 5.25%, a 15-year high, which has pushed up mortgage costs but also led to higher savings rates.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), an influential economics think tank, said that ministers did not “have a lot of control” over cutting inflation.

Grant Fitzner, chief economist at the Office for National Statistics (ONS), said price rises slowed in October as “last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year”.

ALSO READ-Jaishankar, Sunak discuss FTA 

Categories
-Top News Economy UK News

IMF defends gloomy UK forecast after govt criticism

Newly appointed UK Chancellor of the Exchequer Jeremy Hunt leaves 10 Downing Street in London, Britain, on Oct. 14, 2022. Xinhua/Li Ying/IANS)

Forecasts are never perfect given the many factors that affect economic growth – from geopolitics to the weather. But such reports can point in the right direction, especially where they align with other predictions…reports Asian Lite News

The International Monetary Fund has rejected government suggestions that its latest assessment of the UK economy is too gloomy.

The influential global group forecasts the UK will have the highest inflation and slowest growth next year of any G7 economy, falling behind the US, France, Germany, Canada, Italy and Japan.

The Treasury said recent revisions to UK growth had not been factored in to the IMF’s report. But the group denied being pessimistic.

IMF chief economist Pierre Olivier Gourinchas told the BBC: “We’re above the Bank of England estimate [for growth] for next year, so I don’t think we are particularly pessimistic. I think we’re trying to be honest interpreters of the data here.”

Forecasts are never perfect given the many factors that affect economic growth – from geopolitics to the weather. But such reports can point in the right direction, especially where they align with other predictions.

The IMF, an international organisation with 190 member countries, has said the forecasts it makes for growth the following year in most advanced economies have, more often than not, been within about 1.5 percentage points of what actually happens.

In July last year, it forecast that the UK economy would grow by 3.2% in 2022. It revised that upwards to 4.1% at the start of this year.

But official UK figures released last month estimated that the country’s economy expanded by 4.3% in 2022 – considerably more than the IMF’s initial estimate.

According to the group’s latest forecast, which it produces every six months, it expects the UK to grow more quickly than Germany in 2023, keeping the UK out of bottom place for growth among the G7. But it downgraded the UK’s prospects for next year, estimating the economy will grow by 0.6%, making it the slowest growing developed country in 2024 – widely predicted to be a general election year.

The IMF says the UK’s immediate prospects are being weighed down by the need to keep interest rates high to control inflation, which has been falling but remains stubbornly above target. It warned Bank of England rates would peak at 6% and stay around 5% until 2028. Rates are currently 5.25%.

“The decline in [UK] growth reflects tighter monetary policies to curb still-high inflation and lingering impacts of the terms-of-trade shock from high energy prices,” the report said. The IMF’s forecast has come at a bad time for the UK government, which is keen to promote the idea that the economy is at a turning point with inflation falling decisively and interest rates likely to have peaked.

Government sources suggested the IMF had not taken into account the fact that expectations for market interest rates had fallen in recent weeks, and that the Office for National Statistics (ONS) had upgraded its assessment of the UK’s post-pandemic recovery.

He added that a “preliminary read” of the ONS’s revised data had changed the picture for 2021, but “probably not much” for the current forecasts.

“If anything,” he said, past upgrades for 2021 would mean “there is less room to grow and catch up, so it might not lead to a big change upwards in terms of the growth performance.”

Responding to the IMF’s report earlier, Chancellor Jeremy Hunt said: “The IMF has upgraded growth for this year and downgraded it for next – but longer term they say our growth will be higher than France, Germany or Italy.

“To get there we need to deal with inflation and do more to unlock growth.”

On Tuesday, the Bank of England’s Financial Policy Committee (FPC), which monitors the stability of the UK financial system, also warned on the UK’s high interest rates.

It said financial markets expected rates would “have to stay high for a long time”, putting pressure on household finances.

ALSO READ-Inflation is on track to come down, says Hunt

Categories
-Top News UK News

Tax cuts unlikely before election, says Hunt

Hunt’s comments will concern Tory MPs, who have been pushing for tax cuts in the autumn statement in the run-up to next year’s general election…reports Asian Lite News

Jeremy Hunt has said he must “double down” on high prices after admitting a package of pre-election tax cuts this autumn was looking unlikely.

The government would not make moves to “pump billions of additional demand” into the economy, the chancellor added.

The prime minister had previously pledged to halve inflation to about 5% by the end of the year but it has remained at 8.7%.

In an interview with the Financial Times, Hunt said achieving Rishi Sunak’s promise was “going to be more challenging than we thought”.

“We will not countenance tax cuts if they make the battle against inflation harder,” he said. “If we were to pump billions of pounds of additional demand into the economy when inflation is already too high, that would mean fiscal policy working against monetary policy.”

Hunt’s comments will concern Tory MPs, who have been pushing for tax cuts in the autumn statement in the run-up to next year’s general election.

The chancellor was speaking before his annual speech to the City of London on Monday, during which he will announce measures he hopes will grow the economy by making UK stock markets more appealing to firms seeking to float their businesses.

During the speech, he will also set out proposals to simplify rules for buying and selling shares and deliver higher returns for investors, as well as announcing a vision for a new kind of stock exchange allowing private companies to access markets without floating.

Hunt said: “These commonsense changes are grasping our newfound Brexit freedoms to simplify the rulebook – making it easier than ever for firms to research, raise funds, and float their business.”

The chancellor also said the government could resist “inflationary” public sector pay demands, while applying new pressure to companies, saying they ought to hold down prices and had “moral responsibilities to their own customers in a cost of living crisis”.

He said: “There are times when margin rebuild is legitimate and there are times when you need to think about the impact on your own customers.”

Cabinet ministers have been pushing Sunak to accept a 6% public sector pay rise recommended by the independent pay review bodies, the Times reported.

It is understood that the education secretary, Gillian Keegan, health secretary, Steve Barclay, defence secretary, Ben Wallace, justice secretary, Alex Chalk, and home secretary, Suella Braverman, are among the high-profile ministers lobbying Sunak.

Earlier this year the chancellor came under pressure from Conservative backbench MPs to unveil a raft of tax-cutting measures.

“We can’t wait until the next general election, people are depressed, we’ve got to give them hope,” said the backbencher Edward Leigh. “Corporation, personal, fuel tax – you’ve got to give them something.”

Another MP was reported to have told Hunt the Conservative party would face a “fin de siècle” – the end of an era – in government if people did not feel they had more disposable income.

The Tories continue to trail Labour in the polls, with recent modelling based on a mega-poll of new constituency boundaries suggesting Keir Starmer’s party are on course to secure a 140-seat majority in the next election.

With the Conservatives still suffering from a large polling deficit, Labour’s support was found to be at about 35% – 12% ahead of Sunak’s party.

ALSO READ-Sunak wants 2% tax cut before polls

Categories
-Top News UK News

Hunt to announce £4bn boost for childcare

Newly appointed UK Chancellor of the Exchequer Jeremy Hunt leaves 10 Downing Street in London, Britain, on Oct. 14, 2022. Xinhua/Li Ying/IANS)

One Treasury source suggested that the Department for Education could decide how to split the new funding better between the existing offer for three-year-olds and new provision for younger age groups…reports Asian Lite News

A £4bn expansion of free childcare for one- and two-year-olds in England is expected to be announced in the budget on Wednesday as part of a wider drive to help people into work and boost growth.

The plan would provide an extra 30 hours a week to parents of one- and two-year olds, and increase funding by £288m by 2024-25 for the existing programme of free childcare for three year-olds.

The chancellor, Jeremy Hunt, is planning to increase the hourly rate paid to childcare providers by the government to deliver their existing 30 hours weekly entitlement, a key demand from the sector and some Conservative MPs.

The government will give local authorities funding to start setting up wraparound childcare provision in schools, starting in September 2024, as it tries to match Labour’s pledge to come up with a bold offer on childcare ahead of the next election.

Childcare has emerged as a key political battleground in the run-up to the next election, with UK parents facing among the highest costs in the world, meaning that some parents, even those on middle incomes, conclude it is not worth taking on new or extra work.

Officials suggested the measure could be Hunt’s “rabbit from the hat” moment in a statement that was otherwise expected to yield few surprises, with the chancellor downplaying expectations of tax cuts or other big spending commitments.

Rishi Sunak was understood to be taking a final decision on signing off the plan, which government insiders believe would help him deliver on his pledge to increase sluggish growth, on his return from the US on Tuesday.

While the markets have calmed since Liz Truss’s disastrous mini-budget last September and the economic outlook is less turbulent, millions of people are still grappling with the cost of living, while inflation is at a 40-year high and the country is gripped by strikes.

Conservative MPs who have called for tax cuts are likely to be disappointed as the chancellor focuses on delivering Sunak’s pledge to boost growth by encouraging the over-50s, people with disabilities and chronic conditions, and benefits claimants back into the workplace.

The chancellor is also expected to extend household energy bill support by three months, increase corporation tax from 19% to 25% in April, freeze fuel duty and announce a £5bn boost for defence spending.

The government is also expected to bring in changes to the staff-to-child ratios for two-year-olds in childcare, moving from 1:4 to 1:5 to align with Scotland, and will consult on further measures to give providers flexibility. The plan was first mooted by Liz Truss but was reported to have been scrapped by Sunak, as it would prove expensive and unpopular.

One Treasury source suggested that the Department for Education could decide how to split the new funding better between the existing offer for three-year-olds and new provision for younger age groups.

A second senior Whitehall source said they believed that Hunt could set out a new free hours entitlement for parents of children aged between nine and 36 months and an additional offer for one-year-olds from disadvantaged families.

They also said that the DfE had been pushing for the hours to be funded “at cost” rather than the current low rate, which has led to childcare providers struggling and in many cases asking for top-up payments from parents.

Many experts have been warning that government subsidies are not sufficient to fund the places needed, leading to large supply gaps in parts of the country. In Hammersmith and Fulham in London, for example, a recent study by Nesta showed that a place for a two-year-old cost £10 an hour. The government subsidy rate for that place is £6.66.

“It is all about getting money to the providers at this point,” said one Tory MP. “Unless they are properly funded for what they do, there is no point just offering more and more hours.”

The chancellor said on Sunday that childcare costs were stopping some parents from taking a job and the government could make a “big difference” by helping to reduce them further, as part of a package of measures to break down barriers to entering the workforce.

Ministers have already announced plans, to be confirmed in the budget, to pay childcare support to parents on universal credit up front, instead in arrears. The current £646-a-month per child cap on support is also expected to increase by several hundred pounds.

However, the chancellor had downplayed the prospect of expanding free childcare provision now. “We would like to help everyone. It’s expensive to do it. You can’t always do everything at once,” he said.

ALSO READ-UK Chancellor Jeremy Hunt joins G20 meet

Categories
-Top News Europe UK News

Hunt rules out significant tax cuts in Budget  

The Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt meet in Downing Street. Picture by Simon Walker / No 10 Downing Street

Hunt took aim at Labour, citing Keir Starmer’s pledge not to reopen the big government chequebook. The chancellor claimed the party had since made tens of billions of unfunded spending commitments…reports Asian Lite News

Jeremy Hunt has signalled tax cuts will only come “when the time is right” and be matched by “spending restraint”, as he sought to temper restive Conservative backbenchers’ expectations ahead of the budget in March.

However, the chancellor said he hoped to inject what he described as much-needed optimism about the country’s future, saying he wanted Britain to “have nothing less than the most competitive tax regime of any major country”.

In a speech at Bloomberg, the chancellor targeted economic inactivity and urged those who retired early after the Covid pandemic, or struggled to find a new job after the furlough scheme ended, to rejoin the workforce.

“We need you, and we will look at the conditions necessary to make it worth your while,” the chancellor said.

Hunt blamed Britain’s woes on “economic headwinds” that affected many countries, citing favourable growth statistics, and inflation remaining higher in 14 European Union countries. “Declinism about Britain is just wrong,” he said.

However, after pressure from Tory MPs – including the Conservative Growth Group founded by allies of Liz Truss – Hunt stressed that investment would only follow financial stability, and gave little hope that his March budget would reduce the tax burden.

“Confidence in the future starts with honesty about the present,” he said.

Hunt said “we need lower taxes” and that high rates “affect the incentives” of businesses to invest, but stressed that “sound money must come first”.

“Our ambition should be to have nothing less than the most competitive tax regime of every major country,” he said, but that would mean “restraint on spending”.

The creation of “mini-Canary Wharfs” – how Hunt dubbed the plan to reinvent Truss’s low-regulation, low-tax “investment zones” – was promised, with details about where they would be located to be announced “shortly”.

Hunt took aim at Labour, citing Keir Starmer’s pledge not to reopen the big government chequebook. The chancellor claimed the party had since made tens of billions of unfunded spending commitments.

After a cabinet away-day at Chequers, where ministers discussed gloomy polling, Hunt signalled his ambitions would not be realised immediately – paving the way for further announcements in the run-up to the next election about ways to boost growth.

“This is a project that is not going to happen in the next 18 months or the time span before the next election,” Hunt said. However, he still tried to provide hope to glum Tory MPs, adding: “Even in really difficult times, we can make incredible progress.”

Labour said Hunt and Sunak had no plan to fix “13 years of Tory economic failure”.

Rachel Reeves, the shadow chancellor, said: “Britain has so much potential. From creating good, new jobs in the industries of the future, to making our country the best place to start and grow a business, Labour’s proper plan for growth will grasp those opportunities and make our economy stronger to face up to the challenges.

“Thirteen years of Tory economic failure have left living standards and growth on the floor, crashed our economy, and driven up mortgages and bills. The Tories have no plan for now, and no plan for the future. It’s time for a Labour government that will build a better Britain.”

ALSO READ-Hunt to dismiss ‘gloom’ about economy

Categories
-Top News UK News

Hunt to dismiss ‘gloom’ about economy

Newly appointed UK Chancellor of the Exchequer Jeremy Hunt leaves 10 Downing Street in London, Britain, on Oct. 14, 2022. Xinhua/Li Ying/IANS)

Speaking at Bloomberg’s European headquarters in London, Hunt is also expected to continue to resist calls from some Tory MPs for tax cuts to kickstart flagging economic growth…reports Asian Lite News

Hunt will deliver an upbeat message in a keynote speech today, where he will say the government has a plan to use “British genius and British hard work” to boost economic growth and make the country “the world’s next Silicon Valley”.

He will go on to say the UK is “poised to play a leading role in Europe and across the world in the growth sectors which will define this century”.

According to advance extracts from his speech released by the Treasury, he will also say “declinism about Britain was wrong in the past and it is wrong today”.

Speaking at Bloomberg’s European headquarters in London, Hunt is also expected to continue to resist calls from some Tory MPs for tax cuts to kickstart flagging economic growth.

Instead he will say the UK should exploit the opportunities provided by the UK’s withdrawal from the EU to raise productivity while using the proceeds of growth to support public services.

Hunt will say that some of the “gloom” about the current economic outlook is based on statistics that “do not reflect the whole picture”.

“Like every G7 country, our growth was slower in the years after the financial crisis than the years before it,” he will say.

“But since 2010, the UK has grown faster than France, Japan and Italy. Since the Brexit referendum, we have grown at about the same rate as Germany.

“If we look further ahead, the case for declinism becomes weaker still. The UK is poised to play a leading role in Europe and across the world in the growth sectors which will define this century.”

Hunt will also say: “Our plan for the years that follow is long-term prosperity based on British genius and British hard work.

“(And) world-beating enterprises to make Britain the world’s next Silicon Valley.”

The chancellor will add: “It is a plan necessitated, energised and made possible by Brexit which will succeed if it becomes a catalyst for the bold choices we need to take.

“Our plan for growth is a plan built on the freedoms which Brexit provides. It is a plan to raise productivity. It is a plan to use the proceeds of growth to support our public services at home, to support businesses in the new low-carbon economy and to support democracy abroad. It is the right course for our country and the role in the world to which we aspire.”

Hunt will also use his speech to announce that the government is to proceed with reforms to so-called “Solvency II” – an EU directive that governs the amount of funds British insurers are required to hold in reserve.

The Treasury pointed to an estimate by the Association of British Insurers which suggested the changes could unlock up to £100bn of private investment into UK infrastructure and clean energy – such as nuclear power – over the coming decade.

His address will come after a cabinet away day at Chequers yesterday, where Hunt told ministers they must maintain their “disciplined approach” if they are to get inflation under control.

The chancellor is facing calls from some Tory MPs to cut taxes in his budget in March to inject growth into the economy.

But at Chequers, both he and Prime Minister Rishi Sunak emphasised the priority remained inflation which was only predicted to fall because of the “tough decisions” taken to stabilise the economy following former PM Liz Truss’s catastrophic mini-budget tax giveaway.

“The chancellor said it would be necessary to retain this disciplined approach in order to reduce inflation, because it is the greatest driver of the cost of living,” according to a No 10 readout of the meeting.

ALSO READ-Hunt unleashes tax rises

Categories
-Top News UK News

Hunt to unveil spending cuts, tax rises

Chancellor and Prime Minister will have to answer a financial “black hole” that could be as large as £60bn – which may require up to £35bn of spending cuts and an extra £25bn raised through taxation…reports Asian Lite News

Jeremy Hunt will unveil his autumn statement on Thursday, where he will attempt to find up to £60bn from a combination of tax hikes and spending cuts to rebalance the books.

Both the chancellor and Prime Minister Rishi Sunak have warned that “difficult decisions” will need to be made in order to restore the UK’s economic credibility.

But speculation continues about what exact measures will form the autumn statement.

A report from the Resolution Foundation economic think tank has suggested Sunak and Hunt face a thankless task to rebalance the nation’s finances, with at least £40bn needing to be found by the government.

Treasury sources said the financial “black hole” could be as large as £60bn – which may require up to £35bn of spending cuts and an extra £25bn raised through taxation.

Minimum wage

Britain has a legal minimum wage which all firms should pay and all workers should receive which goes up every April.

With the cost of living soaring, there have been calls for the government to increase the minimum wage – officially known as the National Living Wage – by more than was planned in the autumn statement.

At present, the National Living Wage for over-23s is £9.50 an hour, for those aged 21-22 it is £9.18, for those aged 18-20 it is £6.83 and for those under-18 or apprentices it is £4.81.

The rates are the same across all parts of the UK.

Hunt will announce a rise in the National Living Wage for over-23s from £9.50 an hour to about £10.40 an hour.

The rise of nearly 10% would benefit around 2.5 million people, the original report in The Times said.

The newspaper also reports that eight million households will receive cost of living payments worth up to £1,100 a year.

Council tax

The Daily Telegraph has reported the government is also considering removing the requirement for local authorities to hold a referendum before increasing council tax by more than 2.99%, allowing them to raise significantly more money.

The new threshold could be 5%, according to the newspaper, which would see households in Band D paying up to £100 extra.

It could also mean that average council tax bills exceed £2,000 a year for the first time.

Under present rules, councils responsible for social care are allowed to increase their bills by 2.99%, including a 1% levy for social care.

If a local authority wants to raise bills any further, it must hold a local referendum.

But under new plans expected to be unveiled in the autumn statement, the maximum amount councils can increase bills without holding a referendum is expected to rise to 4.99% to help pay for social care.

Most councils are expected to take advantage of the freedom to charge residents more.

The Conservative Party manifesto in 2019 pledged to keep a veto on large council tax rises, insisting local people would “continue to have the final say”.

But a Treasury source told the Telegraph that councils need “more flexibility” to raise money.

The Telegraph has also suggested that the chancellor is considering plans to reduce the amount of funding received by councils for some of the services for refugees hosted by UK families.

Freezing tax thresholds

In the 2021 spring budget, Sunak, who was chancellor at the time, froze personal tax thresholds, which meant more low-income households had to pay the basic rate of income tax while those with earnings nearing £50,000 were made to pay the higher 40% rate.

The freezes were at the time forecast to last five years and raise billions for the Treasury by 2026, but it is thought this could be extended to 2028.

The Conservative Party’s winning 2019 manifesto promised to keep taxes low, so prolonging the freeze in the threshold at which workers start paying taxes is politically delicate ground for Mr Sunak’s government

However, it would send a signal the UK is committed to balancing its books over the long term.

Income tax

As chancellor, Sunak also promised to cut the basic rate of income tax to 19% in April 2024 and then to gradually reduce it to 16% by 2029.

While Truss’s government had said it would cut 1p of the basic rate of income tax from April 2023 – given the great need to cut the country’s debt, it is unclear whether or not this will be a pledge that is kept.

The Telegraph newspaper has suggested Hunt is planning on reverting to Sunak’s initial policy and planning a delay in the cut to the basic rate of income tax until 2024.

The cut could be completely off the table, however the Conservative Party’s commitment to keeping taxes low where possible suggests this is a less likely outcome.

The paper has also reported that ministers have discussed slashing the rate of income tax relief that is applied to higher rate taxpayers from 40p to 20p – which would mean millions of higher rate taxpayers could face paying more income tax.

Officials are also said to have discussed raising the top rate of income tax – which was 50p until it was abolished by former chancellor George Osborne in 2013.

But this is believed to be a less likely path for Sunak and Hunt to choose to go down.

ALSO READ-UAE Federal Tax Authority to launch EmaraTax