Hunt promises 110 measures for growth as he seeks to boost Tory election hopes
Jeremy Hunt will declare the economy is “back on track” as he announces plans to cut national insurance and extend a £10 billion-a-year tax break for businesses.
With an eye on next year’s general election, Mr Hunt is expected to offer a national insurance cut for 28 million workers and make permanent the “full expensing” regime allowing firms to reduce their tax bills when they invest.
A one percentage point cut in national insurance contributions would cost the Treasury about £5 billion and be worth about £380 a year to an individual earning more than £50,000, The Times reported.
The Chancellor’s Commons statement will seek to revive both the UK’s struggling economy and the Tories’ election chances.
The Chancellor is expected to take advantage of headroom in the public finances, allowing him to reduce taxes while still meeting his “fiscal rules” of having debt falling in the fifth year of the economic forecast and for borrowing to be less than 3% of gross domestic product (GDP).
This is partly due to increased tax receipts as a result of higher wages and the freeze in income tax thresholds.
As a result of this “fiscal drag”, millions more workers are crossing the earnings threshold to pay tax for the first time or shifting into higher bands.
In a video message ahead of his appearance in Parliament, Mr Hunt said he wanted to encourage entrepreneurs.
“I’m thinking of my own business, that I set up over 30 years ago,” the Chancellor, who established an education company, said.
“I want to help thousands of other people do what I did, and I hope today will make a really big difference.”
He will attempt to turn a corner after the Covid-19 pandemic and the energy price spike following Russia’s invasion of Ukraine led to the highest tax burden since the Second World War and huge state interventions to support the stricken economy and hard-pressed households.
Mr Hunt will tell MPs: “The Conservatives will reject big government, high spending and high tax because we know that leads to less growth, not more.”
With the Bank of England forecasting a stagnant economy in 2024, Mr Hunt will insist his plan can deliver growth and reduce the national debt.
“After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track,” he will say.
“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.”
He will promise to remove planning red tape and speed up access to the national grid.
As part of a plan to cut business taxes, the full expensing scheme allowing firms to write off the cost of spending on new machinery and equipment from profits will be made permanent instead of expiring in 2026.
Under the scheme, for every pound a company invests, their taxes are cut by up to 25p.
It is seen as a way of boosting productivity through encouraging investment in new technology, addressing an issue which has dogged the UK economy for years.
“Taken together, we will increase business investment in the UK economy by around £20 billion a year over the next decade and get Britain growing,” Mr Hunt will say.
For almost three million workers, the Government has already announced an increase in the national living wage, which will rise from £10.42 to £11.44 from April, with the policy also extended to cover 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.
Shadow chancellor Rachel 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.”