Politics latest news: Hunt will only have room for ‘tiny’ tax cuts, IFS boss says

Jeremy Hunt will only have room to make “tiny” tax cuts at the Autumn Statement, the director of the Institute for Fiscal Studies think tank has suggested.

Paul Johnson poured cold water on the idea that the Chancellor could have enough fiscal headroom to make major tax cutting moves on Wednesday.

He told Times Radio: “What he [Mr Hunt] will have is a very, very small number of billions of pounds to say, well, I’m going to make a tiny cut here or a tiny cut there or something in the future.

“But two things are really important to bear in mind. The first is that over this parliament taxes, whatever he does this week, taxes will have risen by more than they have risen over any parliament, at least since the Second World War.

“So this is a massively tax raising parliament, whatever happens. And the second thing is, if he does say he’s got room, it’s only because he’s claiming to have some incredibly tight spending plans for the whole of the next parliament, essentially cutting public service spending in quite a lot of areas. So if he says he’s got room for tax cuts, it’s for those two reasons.”

His comments came after Rishi Sunak used a speech in London this morning to announce the Government is now in a position to start cutting taxes.

Mr Sunak said delivering on his goal of halving inflation last week meant “we can begin the next phase and turn our attention to cutting tax”.

You can follow the latest updates below and join the conversation in the comments section here. 

04:00 PM GMT

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03:19 PM GMT

Tories: 'We will cut tax and reward hard work'

03:04 PM GMT

Autumn Statement: The taxes Jeremy Hunt could cut

Jeremy Hunt has argued that tax cuts are needed to get the British economy “fizzing” again, but the exact measures he will announce on Wednesday remain closely guarded.

The Telegraph has taken a look at the Chancellor’s options and assessed which is most likely - and least likely - to be announced.

You can read the full piece here.

02:43 PM GMT

David Cameron formally introduced to House of Lords

David Cameron, the Foreign Secretary, has just been formally introduced to the House of Lords.

Lord Cameron, dressed in the traditional red robe of the upper chamber, was introduced as “Baron Cameron of Chipping Norton”.

Taking the oath of allegiance, he told the chamber: “I, David, Lord Cameron of Chipping Norton, do swear by almighty God that I will be faithful and bear true allegiance to His Majesty King Charles, His heirs and successors, according to law, so help me God.”

02:10 PM GMT

Join the conversation

Telegraph readers are debating whether tax cuts at the Autumn Statement would be enough to restore Conservative voters’ faith in the Tories.

Broad Gate said: “Fool me once, shame on you; fool me twice, shame on me. The only thing keeping Rishi Sunak’s head above water is the belief Labour will be even worse. The electorate are being asked to choose the lesser of two evils.”

David Fleming said: “Halving inflation has virtually nothing to do with Rishi Sunak. We can all see that his tax cuts are only being proposed in blind panic now he knows that the Rwanda debacle is going to destroy him at the next election.

“Whatever bones Jeremy Hunt throws will not compensate for the six per cent rise through fiscal drag so it won’t amount to a tax cut, just a reduced rise. He will get zero thanks for it if people don’t actually have more money in their pockets.”

AT Lerwick said: “I’ll take any tax cuts on offer but, for me, it’s lowering immigration that could sway me at the election.”

You can join the conversation in the comments section below by clicking here.

01:56 PM GMT

Pictured: Sunak and Hunt learn to lay bricks during north London college visit

01:53 PM GMT

Handling of HS2 project a 'national embarrassment', claim Labour

The shadow business secretary has called the axing of the HS2 project a “national embarrassment”, as he said boosting investment into Britain is a top priority for the Labour Party.

Jonathan Reynolds, speaking at the Confederation for British Industry’s (CBI) conference, said: “In the last 13 years, we’ve had eleven different growth strategies, and it looks like you’re getting the 12th one this afternoon.

“Take HS2: What we’ve seen is a national embarrassment; billions of pounds have been wasted, business let down, regeneration plans lost. A flagship Government policy gone overnight.”

01:22 PM GMT

Foreign workers will need salary of over £30,000 to come to Britain

Foreign workers will need a salary of more than £30,000 to come to Britain under reforming plans as annual net migration is expected to stick at around 500,000 in figures to be announced this week.

Ministers are expected to set out proposals to reduce the level of net migration by raising the salary threshold for skilled workers.

Workers outside shortage occupations currently require at least £26,200 in salary to take up jobs in the UK, significantly below the median wage of £33,000.

You can read the full story here.

01:00 PM GMT

Labour: Sunak claims tomorrow will be better but ‘can’t fix problems of today’

Labour claimed Rishi Sunak was promising “things will be better tomorrow” when he could not even “fix the problems of today”.

Pat McFadden, Labour’s national campaign coordinator, took aim at Mr Sunak after he set out five long-term decisions he intended to make on the economy (see the post below at 10.49).

Mr McFadden said: “The Tories have failed to deliver on so many pledges from the past. Why should people believe they will deliver on pledges for the future?

“It sums up this Conservative Party to claim things will be better tomorrow when they can’t even fix the problems of today.

“After thirteen years of Conservative governments, working people have been left worse off and the Conservative economic record lies in tatters. Only Labour can get our economy growing and deliver change for working people.”

12:36 PM GMT

‘We are taxed more than we have been at any point for the last 70 years’

The UK is “very highly taxed” at the moment and people are paying “more than we have been at any point for the last at least 70 years”, Paul Johnson said.

But the director of the Institute for Fiscal Studies think tank said compared to other countries in Western Europe the UK is “less highly taxed”.

Speaking to Times Radio, Mr Johnson said: “We are taxed more than we have been at any point for the last at least 70 years.

“So by UK historic standards, we are very highly taxed and taxes have gone up, as I said, a lot over this Parliament.

“But relative to most of Western Europe, we are less highly taxed. Taxes in France, for example, are massively higher than they are here. So it depends what you’re making the comparison with.”

12:19 PM GMT

IFS boss: Hunt will only have room for ‘tiny’ tax cuts

Paul Johnson, director of the Institute for Fiscal Studies think tank, suggested Jeremy Hunt will only have enough headroom at the Autumn Statement to announce “tiny” tax cuts.

He told Times Radio: “What he will have is a very, very small number of billions of pounds to say, well, I’m going to make a tiny cut here or a tiny cut there or something in the future.

“But two things are really important to bear in mind. The first is that over this parliament taxes, whatever he does this week, taxes will have risen by more than they have risen over any parliament, at least since the Second World War.

“So this is a massively tax raising parliament, whatever happens. And the second thing is, if he does say he’s got room, it’s only because he’s claiming to have some incredibly tight spending plans for the whole of the next parliament, essentially cutting public service spending in quite a lot of areas. So if he says he’s got room for tax cuts, it’s for those two reasons.”

12:07 PM GMT

PM to face grilling by Liaison Committee next month

Rishi Sunak will face a grilling by the powerful Liaison Committee from 2pm on Tuesday December 19.

That is the last day before the House of Commons rises for its Christmas break.

Mr Sunak previously appeared in front of the committee in July. The committee is formed of MPs who chair select committees.

11:50 AM GMT

Analysis: Sunak finally shifts economic debate and lights fuse on tax cut speculation

Today’s speech by Rishi Sunak represented a turning point for the Government and a significant shift on the wider economic debate.

After months of sticking doggedly to the same line of emphasising the importance of halving inflation and dismissing questions about tax cuts, the narrative has now officially changed.

The Prime Minister confirmed that tax cuts are on the way but perhaps understandably would not be drawn directly on what exactly could be cut first.

However, there was a clue.

Mr Sunak did stress that his focus would be on the “supply side” of the economy which would suggest that business tax cuts rather than personal tax cuts could be prioritised at the Autumn Statement on Wednesday.

The PM’s comments will now spark 48 hours of frenzied speculation about where Mr Hunt will target his economic pain-relief.

11:29 AM GMT

PM vows to do 'what is necessary' to get Rwanda flights off the ground

Rishi Sunak said “people’s patience has run thin” with the legal “merry-go-round” over the Rwanda scheme.

The Prime Minister promised to do “what is necessary” to get flights away carrying asylum seekers on a one-way trip to Rwanda.

He said the number of small boats crossings has already come down but “we need to finish the job and that’s why we need to get the Rwanda scheme up and running”.

11:18 AM GMT

'No way' a Labour government could cut taxes, claims Sunak

Rishi Sunak was asked about polling which suggested many voters now view Labour as the party of lower taxes rather than the Tories.

He said: “People should just look at what has happened over the past few years and I am being very honest about the fact that we had to take a bunch of decisions. Those were the result of a once in a century pandemic.

“And then a war in Ukraine that meant energy bills spiralled...”

He then claimed there was “no way” that a Labour government would be able to cut taxes.

The Prime Minister said: “There is a serious moment coming. When we have an election there is going to be a very clear choice at that election. Do you want a government and a party that is committed to bringing down borrowing and debt and controlling public spending so that we can cut taxes?

“Or do you want a government and a party that is committed to borrowing £28billion more? Because there is no way that if you are going to borrow £28billion more that you are going to be able to cut people’s taxes. It is as simple as that.”

11:14 AM GMT

Benefits system 'should be compassionate', says PM amid questions over uprating decision

Rishi Sunak would not say which measure of inflation the Government will use to uprate benefits in April next year.

Normally the September figure is used but there is speculation ministers could choose the figure for October. Inflation in September was 6.7 per cent while for October it was 4.6 per cent. Picking the smaller number would save the Treasury billions of pounds in expenditure.

Asked if the Government will pick September or October, Mr Sunak said he was “not going to preempt the decisions that will be made and announced on Wednesday”.

But he said he believed the welfare system “should be compassionate, it should be fair and it should be sustainable”.

11:08 AM GMT

Sunak won't be drawn on specifics of potential tax cuts

Rishi Sunak was asked after his speech which specific personal taxes could be cut.

The Prime Minister would not be drawn ahead of the Autumn Statement on Wednesday.

He said: “I am not going to speculate or comment on individual tax changes. That will be for the Chancellor on Wednesday.”

11:06 AM GMT

PM: 'You can trust me when I say that we can start to responsibly cut taxes'

Rishi Sunak said voters can “trust” him to deliver on his economic pledges.

Concluding his speech in London, the Prime Minister said: “The first time most of you saw me was during Covid when I stood up at a press conference to announce the furlough scheme. From that moment until today, whether you like me or not, I hope you know that when it comes to the economy, when it comes to your job, your family, your incomes, I will always take the right decisions for our country.

“I promised you we would halve inflation. We took the difficult decisions and we have delivered on that promise. So now you can trust me when I say that we can start to responsibly cut taxes and we will now move to the next phase of our plan to grow our economy by reducing debt, cutting tax and rewarding hard work...”

10:55 AM GMT

Sunak: 'Over time we can and we will cut taxes'

Turning to taxation, Rishi Sunak said: “I want to cut taxes. I believe in cutting taxes.”

But Mr Sunak said that “doing that responsibly is hard”.

He said: “We must avoid doing anything that puts at risk our progress in controlling inflation and no matter how much we might want them to, history shows that tax cuts don’t automatically pay for themselves. I can’t click my fingers and suddenly wish away all of the reasons that tax has had to increase in the first place.”

He added: “But my argument has never been that we shouldn’t cut taxes, it’s been that we can only cut taxes once we have controlled inflation and debt. First cut inflation, then cut taxes. And that is why I made the promise to halve inflation and the official statistics show that promise has now been met.

“So now that inflation is halved and our growth is stronger meaning revenues are higher, we can begin the next phase and turn our attention to cutting tax.

“We will do this in a serious, responsible way based on fiscal rules to deliver sound money and alongside the independent forecasts of the Office for Budget Responsibility. And we can’t do everything all at once. It will take discipline and we need to prioritise. But over time we can and we will cut taxes.”

10:49 AM GMT

Government won't leave future generations to 'pay the bill' on UK debt, says PM

Rishi Sunak said the Government is taking five long-term decisions on the economy.

They are: Reduce debt, cutting tax and rewarding hard work, building domestic sustainable energy, backing British business and delivering world class education.

On debt, Mr Sunak said failing to act to reduce the national debt now would mean “just leaving our children to pay the bill”.

He said Labour “talk the talk” on reducing debt but he suggested the opposition would lack the “political courage” to take the steps needed to actually achieve it.

10:46 AM GMT

Sunak: 'Bar to intervene in people’s lives should be high'

Rishi Sunak said his critics were “profoundly wrong” to argue for more borrowing to fund more public services.

He said that the “bar to intervene in people’s lives should be high”.

The Prime Minister said his Government would “back people and businesses”. He said the state should be “there for you during the bad times but gets out of the way during the good”.

10:43 AM GMT

PM 'not saying the job is done' on tackling inflation

Turning to inflation, Rishi Sunak said rising prices amounted to a tax and inflation “erodes” the dream of a wealthier and more prosperous life.

Welcoming the halving of inflation this year, Mr Sunak said he was “not saying the job is done” but his target, set out in January, had been achieved.

He said delivering on the inflation goal showed that “when we make a major economic commitment, we will deliver it”.

Delivering lower levels of inflation means the Government can now “look forward to the future economy we want to build”.

10:40 AM GMT

Sunak accuses opponents of offering 'fairytale' answers on economic problems

Rishi Sunak is now on his feet at a college in London to deliver a speech on the state of the UK economy.

He said that aspiration and achieving a better life feels “out of reach for too many”.

The Prime Minister said the “most urgent choice our country faces is how we change that”.

Mr Sunak argued his opponents had only offered “fairytale answers”.

10:33 AM GMT

PM: 'No parent should ever have to watch their child starve'

Rishi Sunak said “no parent should ever have to watch their child starve” as he opened the Global Food Security Summit in London this morning.

The Prime Minister also launched a White Paper setting out the Government’s long-term approach to international development more broadly up to 2030.

Speaking at the gathering at Lancaster House, Mr Sunak announced a new virtual hub to link UK scientists with global research initiatives aiming to develop climate and disease resistant crops.

He said: “In a world of abundance, no one should die from lack of food, and no parent should ever have to watch their child starve.”

10:17 AM GMT

Labour demand clarity over future of winter fuel payments

Labour’s shadow chief secretary to the Treasury Darren Jones has written to Jeremy Hunt seeking clarity over the future of universal winter fuel payments.

The letter was prompted by The Telegraph’s story about comments made by John Glen (you can read the full story here) as he questioned whether the payments should continue to be made to wealthy pensioners.

Mr Jones said he believed pensioners would be “deeply concerned” and “anxious that their incomes may be under threat”.

The Treasury has insisted a change is not being announced at this week’s Autumn Statement, with a government spokesman saying: “That is not something we are going to do.”

Here is Mr Jones’ letter:

09:57 AM GMT

Pictured: Rishi Sunak opens Global Food Security Summit at Lancaster House

09:51 AM GMT

Rwanda plan ‘in tatters’, claim Labour

Labour said the Government’s Rwanda migrants plan was “in tatters”.

James Murray, a shadow treasury minister, told Sky News: “This is their flagship policy and it is in tatters. I think they have been shown just how badly thought through it has been.

“We have always said it is unworkable and it is not the right thing to do. Now they know it is also unlawful.”

Mr Murray said the Government should ditch the policy and instead focus its efforts on reducing the asylum backlog and on establishing a new cross-border police operation to stop the boats.

09:34 AM GMT

‘I am not going to put a date on planes departing’

A minister said he could not “put a date” on when the first Rwanda migrant flight will take off.

Gareth Davies told Sky News: “We have been clear we want planes to go as soon as possible. We have got to sort this out first. I am not going to put a date on planes departing.”

Asked if the flights would start by the spring, the Treasury minister said: “We will act as quickly as we possibly can.”

The Supreme Court ruled last week that the Government’s original Rwanda plan was unlawful. Rishi Sunak has said he will strike a new treaty with Rwanda and bring forward emergency legislation to declare it a “safe” country in an attempt to save the deportation scheme.

09:15 AM GMT

Burnham demands Hunt unfreeze housing benefit

Jeremy Hunt “must unfreeze housing benefit” in his Autumn Statement on Wednesday, Andy Burnham said this morning.

The Labour Mayor of Greater Manchester said that without the Chancellor making the move the UK “will be staring at a very serious homelessness crisis this winter”.

He told the BBC Radio 4 Today programme: “If I have one message for the Chancellor this morning, it is simple, you must unfreeze housing benefit in the Autumn Statement.

“Otherwise you will not achieve your goal of ending rough sleeping in this parliament.”

Mr Burnham said the freeze on housing benefit “stores up other social problems for the future”.

Local housing allowance has been frozen in cash terms since April 2020.

08:55 AM GMT

‘We are not going to be touching the winter fuel allowance’

Exchequer secretary to the Treasury Gareth Davies said there were “no plans” to reduce the number of pensioners eligible to receive winter fuel payments.

A leaked recording obtained by the Telegraph suggested Paymaster General John Glen questioned the policy of universal winter fuel payments for wealthy pensioners when he was a Treasury minister.

But Mr Davies told Sky News: “We are not going to be touching the winter fuel allowance.”

Pressed on whether he was ruling out means testing the benefit, the Treasury minister replied: “We have no plans to change the winter fuel allowance.”

08:34 AM GMT

Minister silent on uprating benefits decision

There has been speculation that the Government could opt to uprate benefits next April by in line with the October measure for inflation rather than the September measure which is normally used.

Inflation in September was 6.7 per cent while for October it was 4.6 per cent. Picking the smaller number would save the Treasury billions of pounds in expenditure.

Gareth Davies, the Exchequer Secretary to the Treasury, would not be drawn on which measure would be used but pointed out the Government uprated benefits by 10 per cent this year.

He told Times Radio: “I can’t comment ahead of the fiscal event but I would just point out that we did uprate benefits by 10 per cent this year which resulted in I think an extra £600 for millions of families across the country and we have bene very clear that when it comes to the benefits system we want more people off the benefits system and into work.

“But I can’t comment on the specifics of what we may do this week.”

08:21 AM GMT

Sunak to deliver speech on state of the economy mid-morning

Rishi Sunak will deliver a speech on the state of the economy this morning as he sets the scene for the Autumn Statement on Wednesday.

The Prime Minister is due to speak mid-morning and will also be answering questions from the media afterwards.

He is expected to use the address to argue that the economy is now heading in a more positive direction after data published last week showed he had delivered on his pledge to halve inflation.

08:18 AM GMT

Falling inflation ‘laying foundations for growth’, says Gareth Davies

Gareth Davies, a Treasury minister, said falling inflation “is laying the foundations for growth” as he refused to be drawn on which personal taxes could be cut at the Autumn Statement.

Mr Davies was asked during an interview on Times Radio what his preference would be between cutting the basic rate of income tax or the higher rate.

He replied: “It will shock you that I can’t speculate on individual taxes ahead of a fiscal event.

“But we have always been clear that our number one target is getting inflation down. That is the tax that is impacting families and businesses throughout the country.

“That has come down now and that is laying the foundations for growth. But we have also always been clear that ideally we want to get the tax burden down overall but that won’t come at the expense of sound money.”

08:09 AM GMT

Reports of Autumn Statement codenames 'not a million miles away', says Treasury minister

A Treasury minister has appeared to confirm that the Government is using codenames to discuss potential tax cuts ahead of the Autumn Statement.

A report in the Sunday Times said codenames were being used to avoid proposals leaking, with the names of famous rivers apparently being chosen.

It was claimed that cuts to income tax were being discussed under the codename “River Severn”.

Asked if it was true that codenames were being used by the Treasury, Gareth Davies told Times Radio: “I think it is pretty standard practice to refer to different policies by different project names and things like that. Not a million miles away.”

08:04 AM GMT

Treasury minister: Hunt won’t ‘sacrifice sound money’ for tax cuts

A Treasury minister would not say this morning whether the tax burden will be lower after the Autumn Statement on Wednesday.

Gareth Davies was asked during an interview on Times Radio if the tax burden will be lower by the end of the week amid growing Tory calls for Jeremy Hunt to cut personal and business levies.

But he refused to be drawn as he said the “principles of sound money” would not be “sacrificed” by Mr Hunt for tax cuts.

He said: “We have always been clear we want to get the overall tax burden down but that is not going to be at the expense of sound money.

“For what it’s worth, we actually have a lower tax burden than Germany and France for example… overall it is something that is not the highest in the world by any means. We are internationally competitive when it comes to the overall tax burden.

“But we are not going to sacrifice the principles of sound money. Like I have said, we have managed to do great things on inflation. We need to keep going with that.”

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