Chancellor Jeremy Hunt has dropped some heavy hints that everyone will be forced into paying more taxes in his financial plans for the country, which he will be outlining in his Autumn Statement, that he is scheduled to deliver in the House of Commons on Thursday 17 November.
Early indications are that there is a gap of around £55 billion in the public finances and as a consequence, he will be announcing spending cuts of an eye-watering £35 billion and plans that he will say could raise a further £20 billion in tax.
Longest recession ever is on the cards
The cost of living crisis that the UK finds itself gripped in currently, is inevitably going to take its toll on the take-home pay of millions of hard working people. The major economic challenges facing the country have prompted the Bank of England to warn that the UK is staring straight down the barrel of its longest recession since records began.
This comes on the back of the disastrous mini-Budget of previous Prime Minister Liz Truss and her then chancellor, Kwasi Kwarteng, which led to market turmoil and ultimately brought her short spell of leadership to a very premature end. Many of those policies were immediately reversed by Mr Hunt, upon his appointment to his new post.
Without actually giving anything away, the Chancellor reiterated what he had suggested previously when saying: “I have been explicit that taxes are going to have to go up, and that is a very difficult thing for me to do because I came into politics to do the exact opposite.”
Nothing left to help with inflation
He is keeping things fairly close to his chest, possibly putting off the flack that will be coming his way for as long as possible. It seems unavoidable that public services are going to suffer badly in the planned cuts. More worrying is the suggestion that there will not be anything to assist many with the crippling effects that the inflation and subsequent recession will bring.
Energy bill assistance set to end
Just to compound things even further, it is widely expected that the assistance which everyone has been receiving with their energy bills will come to an abrupt end in the spring. Mr Hunt has indicated that he will be giving details about further support for people struggling after that time, saying he would protect the most vulnerable.
He then immediately quashed any positive feelings that might have been derived from that line by insisting that there would have to be constraints attached and anything given would need to be sustainable. “We have a plan to see us through choppy waters so we can make the recession we are in as short and shallow as possible.” he said attempting to put some positivity into his thought processes.
Chancellor discredits Johnson’s vision
Mr Hunt pointed out that the previous leadership had tried a plan that does not show how, in the long run, it can be afforded. In a veiled criticism of former PM Boris Johnson he said that whilst he admired Mr Johnson’s “big visions” and would love to deliver on the exciting things he had outlined during his time as leader, any actions had to have credibility, firmly suggesting that he believed the ideas put forward simply fell down on that front.
He also acknowledged that Covid had prevented the UK from taking advantage of any opportunities open to it after leaving the European Union.
Has much changed in 17 days?
The Statement had been due to be presented on 31 October, but it was postponed to allow for more accurate economic forecasts. Fundamentally, the government’s aim is not to spend more than it collects in tax by the 2026-27 financial year. Several key issues will be the focus for millions of people when Mr Hunt finally announces his plan.
Triple lock, or triple unlock?
Pensions are a major concern, particularly the “triple-lock”, where state pension should rise each year by the highest out of inflation, average earnings, or 2.5%. Ms Truss had promised this would continue, but worryingly, Rishi Sunak when pressed on it, managed to avoid giving a definite answer, prompting significant anxiety across the country. Income tax and windfall tax will both be viewed similarly.
Social care cap could be shelved
Social care too will have many in a considerable panic as there is a thought that Mr Hunt will postpone the introduction of a cap on these costs, which were it to go through would mean people no longer having to pay more than £86,000 towards care during their lifetime.
It is due to come into effect in October 2023, but because of the state of the economy, this could very easily be shelved.
Services watching anxiously
The NHS, schools, the police; more or less everyone will be watching and hoping desperately that they are not penalized to the point that they are left scratching their heads as to how they can manage moving forward. The statement is eagerly anticipated, yet anticipated with dread.
With the Tory’s now lagging behind in the polls, getting any sort of public support for what he brings in would seem remote at best, as it seems unlikely there will be any political good will going spare come Thursday evening.
Opposition go for the jugular
The Labour party have accused the Conservatives of making a “total mess” of the economy. Shadow chancellor Rachel Reeves said Mr Hunt was choosing to tax working people, while doing “little to close tax loopholes which mean some of the wealthiest do not pay their fair share”. She said the UK needed a serious plan for growth and called on the PM to ensure multi-national companies paid “their fair share of tax”.
The Liberal Democrat’s Treasury spokesperson Sarah Olney pointed out that hard working families were going to be “clobbered with yet more unfair tax hikes” simply because the Conservatives have “crashed the economy.”
When is the statement being delivered?
The Autumn Statement will be delivered on Thursday 17 November, with the timing still to be confirmed, although it is expected around lunchtime.