Politics
Chancellor Jeremy Hunt sets out stall to halt ‘vicious circle’ of tax hikes as pressure mounts
Chancellor Jeremy Hunt has vowed to tackle the “vicious circle of ever-rising taxes” by revamping public services and the welfare system.
The cabinet minister argued the state needed to become “more productive”, not bigger, as he pointed to the use of artificial intelligence to realise frontline efficiencies and reduce the burden on the public purse.
He also said the government was looking at welfare changes, with 100,000 people a year moving off work on to benefits “without any obligation” to look for a job.
Mr Hunt made his comments as the Conservative Party annual conference gets under way in Manchester this weekend, with some senior party figures demanding tax cuts.
It follows a report published this week that said the Tories will have overseen, between the 2019 election and the next general election, the biggest set of tax rises since at least the Second World War.
Analysis by the Institute for Fiscal Studies (IFS) thinktank said taxes will have increased to around 37% of national income, equivalent to around £3,500 more per household.
But despite the growing pressure, Mr Hunt told The Times newspaper: “We’re not in a position to talk about tax cuts at all.”
He added: “We need a more productive state, not a bigger state.”
“We need a state that doesn’t just deliver the services it currently delivers, but actually improves the services it delivers and recognises that there’s going to be more calls on those services with an ageing population,” he said.
“But we need to find a formula that doesn’t mean that we’re on a vicious circle of ever-rising taxes.”
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More than 30 Tory MPs, including Liz Truss, Prime Minister Rishi Sunak’s short-lived predecessor, and former home secretary Dame Priti Patel, have vowed not to back further tax hikes.
Ms Truss, whose mini-budget 12 months ago triggered market turmoil in response to unfunded tax cuts and ultimately forced her from office, tweeted on Friday: “We should always seek to reduce the tax burden, especially when there’s so much pressure on family budgets.”
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In his Times interview, Mr Hunt also called for a more upbeat tone about the economy and said people needed to “shrug off a bit of the pessimism”.
Mr Hunt, who took over from Ms Truss’s sacked chancellor Kwasi Kwarteng, said: “When I started the job there was a lot of doom and gloom about Britain, our prospects.
“What I have realised now nearly a year on is that there is just far too much declinism.
“If you look at the fundamentals of the British economy we have had our setbacks like everyone else, we are the fastest-growing large European country, not just since the pandemic but since Brexit, since 2010.
“That’s a period when we’ve had a once-in-a-century pandemic, a global financial crisis that we were particularly exposed to, and a 1970s-style energy shock. Despite all of that the British economy has been very resilient.”
His remarks came after it was revealed the UK economy grew faster than had first been thought between January and March this year.
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Data published by the Office for National Statistics shows UK economic growth was 0.3% from January to March, better than the 0.1% first announced.
The revision put the country’s economy ahead of both Germany and France in terms of post-pandemic performance but behind allies such as the United States, Canada, Japan and Italy.