Autumn Statement: Energy price cap increase dampens Hunt’s ‘tax cuts’ as he denies pre-election handout – live

Jeremy Hunt has denied that it is fundamentally dishonest of the Tories to claim it is the largest tax cut ever for workers when the tax take is rising.

Asked the question, the Chancellor told BBC Radio 4’s Today programme: “I fundamentally disagree with that.”

He said “of course” taxes were going up “so we can pay down our Covid debt”.

Mr Hunt added: “But yesterday I did make a start in bringing down the tax burden. I’ve never said that we were going to get there all in one go.”

Yesterday, the Conservatives posted the claim on social media:

Jeremy Hunt’s autumn statement was “seemingly full of puzzles and paradoxes”, partly due to the impact of high inflation, Office for Budget Responsibility chief Richard Hughes has said – noting that the chancellor effectively allowed spending on public services to fall by £20bn.

“It seems to be an autumn statement where taxes are being cut but the tax burden is going up; where the autumn statement is boosting growth, but the economy is growing more slowly; the economy seems to be performing worse, but it’s generating more revenue for the chancellor,” he said.

Speaking at a Resolution Foundation event, Mr Hughes said: “We are not used to having unexpectedly high levels of inflation in the UK, it has been a long time since we’ve seen inflation in double digits.”

The chancellor benefited from the impact of higher wages on tax receipts, with the frozen thresholds resulting in millions more people dragged into the tax system or into higher bands.

While Mr Hunt pumped £5bn extra into public spending, “he would have had to add £25 billion” if he wanted to keep them the same in real terms, Mr Hughes said.

“So, what effectively he did is allow the real spending power on public services to fall by £20bn and instead he took the extra £30bn he got from what we call fiscal drag and basically gave it back to taxpayers in the form of a rate cut on NICs, and he gave it back to businesses in the form of full expensing in the corporate tax system.”

The Resolution Foundation said the £10bn of personal tax cuts in Jeremy Hunt’s autumn statement are far lower than the £45bn of national insurance and income tax rises already announced in this parliament.

Households will on average be £1,200 worse off overall because of the changes announced in this parliament, the think-tank said.

Chief executive Torsten Bell said: “The truth is, taxes are up not down. Today’s cuts are dwarfed by tax rises already underway. By the end of this decade, taxes are set to be up by the equivalent of £4,300 per household compared to 2019.”

Mr Bell said: “Worse, the giveaways announced today are funded by handing whoever wins the next election implausibly large spending cuts. Tax cuts to boost business investment are welcome, but undermined by plans to cut public investment by over a third - it’s hard to think of a more anti-growth policy.”

There is a “material risk” that Jeremy Hunt’s tax cuts will not be sustainable, and the cuts to public spending forecast as a result are “completely implausible”, experts have warned.

Paul Johnson, director of the IFS said: “These tax cuts have been ‘paid for’, in effect, by a bigger squeeze on the real-terms value of public service budgets and an even bigger squeeze on public investment, which is frozen in cash terms.

“There’s a material risk that those plans prove undeliverable and today’s tax cuts will not prove to be sustainable.”

Ian Mulheirn, an economist at the Resolution Foundation, was even blunter in his assessment.

He wrote on Twitter/X: “OBR draws out completely implausible implications - real terms cuts of 2.3-4.1%/yr after 2025 for unprotected departments.

“What’s the plan here? Abolish the criminal justice system and public transport maybe? This should be the debate, not ‘have they really cut taxes?”’

The front pages of today’s newspapers highlight the contradictory nature of claims surrounding the tax cuts announced in yesterday’s autumn statement:

As the Resolution Foundation notes, the £10bn of personal tax cuts announced by Jeremy Hunt are still dwarfed by the £45bn of already announced national insurance and income tax rises.

“As a result, households will on average be £1,200 worse off overall thanks to the changes announced in this parliament. Only those earning around £11,000 to £13,000, and £42,000 to £52,000, will be better off,” the think-tank said.

Jeremy Hunt has denied being “fundamentally dishonest” by claiming his new tax cuts are “the biggest in history”, reports our political correspondent Archie Mitchell.

The chancellor came under fire after independent experts said overall taxes are still going up despite the announcement of a two per cent cut in national insurance in Wednesday’s autumn statement.

The Conservative Party sparked fresh controversy by publishing an official advert this morning stating that the tax cuts, including a business tax reduction, are “the biggest ever”. The poster was slapped with a clarifying “community note” on social media platform X, which clarified the tax burden is on course to reach a post-war high.

Official spending watchdog the Office for Budget Responsibility (OBR) also stressed that taxes are on course to reach the highest level since the Second World War, despite Mr Hunt’s giveaways.

OBR chairman Richard Hughes said that his fiscal watchdog was working with “four years of just four numbers” on the latter part of government spending plans, following the autumn statement.

He told a Resolution Foundation event: “There are political choices involved there. What we don’t know is what those political choices are, because their spending framework doesn’t require when to make them.

“In any other country in the world, if you look at their fiscal forecasts, they have got a detailed spending plan going out five years, telling you how much they are spending on health, education, transport.

“In our framework, these things kind of run out until the Government makes a political decision to run a spending review.”

James Cleverly has been invited to visit the north east constituency he allegedly called a “s***hole” to see it for himself.

Alex Cunningham, the Labour MP for Stockton North, claimed the home secretary made the offensive remark in the Commons on Wednesday.

Mr Cleverly has denied calling Stockton a “s***hole” – but Mr Cunningham continues to demand an apology, and wants the cabinet minister to see the vibrancy of the area in person.

“I invite him to come to Stockton and I will show him our conservation areas, our ambition for Stockton, Billingham and elsewhere and have him visit our cultural quarter and our huge industrial base,” the frontbencher told The Independent.

Mr Cunningham added: “But I will also show him the communities where 34 per cent of children live in poverty – the damage done by his government’s policies and finish at North Tees hospital which needed replacing over a decade ago.”

Our political correspondent Adam Forrest has the full exclusive report here:

Paul Johnson, director of the Institute for Fiscal Studies, said the “substantial tax cuts” in Chancellor Jeremy Hunt’s autumn statement are being “paid for by planned real cuts in public service spending”.

In a post-statement briefing on Thursday, Mr Johnson said the chancellor is “by the narrowest of tiny margins still on course to meet his – poorly designed – fiscal rule that debt as a fraction of national income should be falling in the last year of the forecast period”.

He continued: “That is on the basis of a series of questionable, if not plain implausible, assumptions. It assumes that many aspects of day-to-day public service spending will be cut. It assumes a substantial real cut in public investment spending.

“It assumes that rates of fuel duties will rise year on year with inflation - which they have not done in more than a decade and they surely will not do next April.

“It assumes that the constant roll-over of ‘temporary’ business rates cuts will stop. It assumes, of course, that the economy doesn’t suffer any negative shocks.”

Jeremy Hunt has insisted that it is “silly” to think about his tax cuts as a pre-election giveaway.

The chancellor told Sky News: “We haven’t chosen the most populist tax cuts. I think it’s silly to think about this in terms of the timing of the next election. We’re trying to make the right decisions for the long-term growth of the British economy.”

Mr Hunt insisted he had not discussed the timing of the general election with Rishi Sunak, but did not rule out an early spring Budget.

He told LBC that the national insurance cut will be brought forward from April to take effect in January because “I want to bring help for families as soon as possible” as energy bills continue to rise.

Asked if he could rule out February as the date for the next budget, the senior Tory said: “I can’t rule out anything because I haven’t taken any decisions. Normally it’s in March, but we will make a decision at the appropriate time.”