The economy is “back on track”, Jeremy Hunt will declare as he starts cutting taxes and pushes for business growth ahead of next year’s election.
The Chancellor will reportedly use his autumn statement to reduce headline rates of national insurance and make permanent a £10 billion-a-year tax break for companies that invest in new machinery and equipment.
His deputy Laura Trott had already indicated that individuals would benefit from a giveaway as well as measures aimed at boosting business.
The Chancellor’s Commons statement on Wednesday is expected to contain 110 different growth measures as he seeks to revive the UK’s economy and the Tories’ election chances.
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.”
With inflation halved, we can turn to the next phase of our economic plan – boosting our long term economic growth.
Tomorrow, I’ll be setting out an Autumn Statement package that does just that. pic.twitter.com/5aNrLcHU9S
— Jeremy Hunt (@Jeremy_Hunt) November 21, 2023
He will promise to cut business taxes, remove planning red tape and speed up access to the national grid.
The Times reported that 28 million people would see a cut to their national insurance while multiple reports suggest that full expensing, a scheme allowing firms to deduct spending on investment in new machinery and equipment from profits, will be made permanent.
There will be support for entrepreneurs to raise capital, measures to “get behind our fastest growing industries”, policies to unlock foreign direct investment and measures to boost productivity, 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.
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.
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.”