Jeremy Hunt has signalled that he is ready to announce tax cuts in his autumn statement, as he considers cutting inheritance and business taxes while squeezing benefits by billions.
The chancellor said that now is a “turning point for the economy” and that “this is the moment” to go for growth ahead of Wednesday’s big announcement.
Mr Hunt is considering slashing inheritance tax – a controversial move bound to draw huge criticism for supporting the rich while others struggle with the high cost of living.
It comes as former deputy PM Michael Heseltine and other senior Tories condemned plans to strip the right to free prescriptions from benefits claimants who don’t look for work – warning that Rishi Sunak’s government risks descending into the politics of “hate”.
Mr Hunt said the move, which is one plank of a wider “back to work” plan expected in next week’s autumn statement, is necessary to stop “anyone choosing to coast on the hard work of taxpayers”.
Former Tory chancellor Ken Clarke said cutting inheritance tax move keep the Tory right happy – but others would find it “appalling”, and suggested it could not be justified with the perilous state of public finances.
In a sign he will go with tax cuts next week, Mr Hunt told The Telegraph: “Without pre-empting the decisions that the prime minister and I make, this is an autumn statement for growth. It’s a turning point for the economy.”
He said the country has “turned the corner in a big way” after Mr Sunak’s pledge to halve inflation was met this week.
Asked if now was the time to go for economic growth, Mr Hunt said: “Yes, absolutely. This is the moment. We’ve got to go for it as a country and I think we’ve got a big, big opportunity. The big message on tax cuts is there is a path to reducing the tax burden and a Conservative government will take that path.”
Tory pressure on Rishi Sunak and Jeremy Hunt to cut taxes
(PA Archive)
Speaking to broadcasters on Saturday, Mr Hunt that “difficult decisions to reform the welfare state” are needed as he considers squeezing benefits by billions while slashing inheritance tax.
Grilled on the possibility of tax cuts, he gave little away, saying: “When it comes to tax, I know there’s been a lot of speculation, we will not do anything that compromises the battle against inflation.”
Mr Hunt said halving inflation – achieved this week – was the “single-most important thing we’ve done and we will not do anything to jeopardise the progress”.
Typically ministers use the September figure for inflation when uprating working-age benefits, which would mean a 6.7 per cent hike. But Mr Hunt has not ruled out using October’s far lower figure of 4.6 per cent.
Mr Hunt and Mr Hunt are facing a furious reaction to a “cruel” welfare crackdown amid efforts to get people back into work under a toughened sanctions scheme.
Free prescriptions, dental treatment and legal aid will be cut off for benefit claimants who are deemed fit to work and do not seek employment.
Lord Heseltine said that the “last thing anyone should do is attack people on health grounds”, adding: “I’m wary of zealots’ interests welling up into hate politics – they need to be careful.”
Former Tory health minister, Steve Brine, said he was concerned that there are many people “who could simply fall further into the margins and drive health inequalities”.
And Dr Latifa Patel of the British Medical Association (BMA) said: “Removing people’s access to the medication that they need would not only be cruel, risking real harm, but also counterintuitive,” arguing it could add to pressure on the NHS.
Lord Heseltine (right) has criticised plan to restrict prescriptions
(Getty Images/iStockphoto)
There are hopes the final forecasts from the Office for Budget Responsibility (OBR) will give Mr Hunt more “fiscal headroom” than expected to make tax cuts when he receives them on Friday.
The chancellor said he wants firms to be the focus of any tax cut he may offer, during a visit to the ITM Power manufacturer in Sheffield.
“In terms of tax cuts you’ll have to wait and see but I will say the priority is helping businesses like this to succeed,” he told the BBC.
Mr Hunt is said to be considering an extension to the “full expensing” scheme, which allows businesses to claim back up to 25p for every £1 of investment. It could cost around £10bn a year to keep it in place indefinitely.
The options for cutting inheritance tax – which is charged at 40 per cent on estates of more than £325,000, with an extra £175,000 towards a main residence passed to direct descendants – include reducing it by 50 per cent, 30 per cent or 20 per cent, according to The Times.
The Tories are said to then be considering making abolishing it entirely an election manifesto pledge next year – which could cost £7bn a year in the short term.
However, the Institute for Fiscal Studies forecast that the amount that the tax raises could rise to more than £15bn by 2033.
Asked about the possibility of an inheritance tax cut, Lord Clarke told Times Radio: “Well, it’s not the tax cut I would choose. Indeed, I’m not sure he’s got any room for tax cuts.
The ex-chancellor said it “might appeal to the Conservative right, but it leaves them open to the most appalling criticisms when inflation and the state of affairs is making poorer people in this country very vulnerable indeed”.
He added: “And I’m not sure that the economic and financial state of the country justifies it.”
Labour leader Sir Keir Starmer said he would wait to see what is in the autumn statement before commenting on any plan to cut inheritance tax.
“We’ll have to wait to see what the government says in its autumn statement. What I want to see is a serious plan for growth,” he told broadcasters during a visit to Scotland.
Elsewhere in the Telegraph interview, Mr Hunt said he would stand as an MP at the next election, despite speculation that he could quit. The Liberal Democrats are eyeing the Surrey seat he will contest.
“I’m aware that it’s the fight of my life, but I’m up for that fight and I’m very confident that I will be back in parliament after the next election,” he said.