Jeremy Hunt has acknowledged it will “take time” to bring taxes down, but he had “made a start” with his autumn statement.
The chancellor admitted the tax take – the total the government collects – stood at £45bn, outstripping the benefits of the cuts announced in the fiscal event.
The headline-grabbing announcement in Mr Hunt’s statement was that the main 12% national insurance rate would fall to 10% from 6 January – saving those on an average salary of £35,000 more than £450 a year.
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1:26
Chancellor announces national insurance cut
The chancellor also abolished Class 2 national insurance payments for the self-employed to show the government “values their work”.
Mr Hunt sought to portray the autumn statement as a tax giveaway in light of the NI cuts – worth £9bn – but economists have pointed out that the overall tax burden remains at a record high because of the continued freeze on tax thresholds.
In an interview with Sky News’ political editor Beth Rigby, the chancellor conceded that “taxes go up from freezing thresholds”.
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He said: “If you’re trying to say that it’s going to take time to get taxes down to the level they were, then I agree.
“But what I said was when it was responsible to do so, when it wouldn’t affect inflation, I would make a start.
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“We’ve done that today and we are a party that believes if we want to grow the economy, then we need to have a lightly taxed economy, and we’ve made a step which, by the way, for someone on average earnings is going to be about £450 – so it’s not insignificant.”
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2:06
UK growth ‘a dead end’ under Tories
Mr Hunt was asked whether he could call the statement a tax giveaway given that the £45bn tax take “dwarfed” the effects of the national insurance cuts.
“Have you taxed more, or cut taxes more?”
“We have put taxes up because it was the right thing to do to support families,” Mr Hunt replied.
Pressed again on whether taxes have been going up or down under the government, the chancellor said: “Taxes have gone up and we are starting to bring them down.”
Mr Hunt also denied that taxes had gone up in part to “clear up the mess” of the previous government under Liz Truss, pointing instead to the “once-in-a-century pandemic” and “energy shock” caused by Russia’s invasion of Ukraine.
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4:22
Analysis: Autumn Statement 2023
Forecasts from the Office for Budget Responsibility, released after the statement, showed taxes are still trending upwards – with a post-war high of 37.7% set to be reached by 2028/29 under the current government plans.
The body put this down to so-called “fiscal drag” – with people drawn into higher tax brackets as their pay increases.
According to the OBR, by 2028/29, frozen thresholds will result in nearly four million additional workers paying income tax – with three million more moved to the higher rate and 400,000 more paying the additional rate.
Mr Hunt was rumoured to have considered income tax cuts in the autumn statement, but it is thought he may defer this to the March budget next year.
Asked whether he would use that opportunity to cut income tax, he replied: “If it’s responsible to do so, if we can do so without increasing borrowing, then of course, as a Conservative, I would like to bring down the tax burden – but I will only do so in a responsible way and one that doesn’t fuel inflation after the great success we’ve had in halving it.”
Sir Keir Starmer continues to face the threat of a major rebellion during a key vote on welfare reforms later – despite making last-minute concessions to disgruntled Labour MPs.
Work and Pensions Secretary Liz Kendall has confirmed that all existing claimants of the personal independence payment (PIP), the main disability benefit, will be protected from changes to eligibility.
The combined value of the standard Universal Credit allowance and the health top-up will rise “at least in line with inflation” every year of this parliament.
And an additional £300m for employment support for sick and disabled people in 2026 has been announced, which will rise every year after.
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10:54
Welfare cuts ‘needed to be made’
Ms Kendall has also promised that a consultation into PIP – “co-produced” with disabled people – will be published next autumn.
She said the U-turn on welfare cuts will cost taxpayers about £2.5bn by 2030 – less than half the £4.8bn the government had expected to save with its initial proposals.
But after announcing the U-turns, Labour MPs were still publicly saying they could not back the plans as they do not go far enough to allay their concerns.
Disabilities minister Stephen Timms would not say he was “confident” the proposals would pass the Commons when asked on Sky News’ Politics Hub with Sophy Ridge.
“We’ve got a very strong package, I certainly hope it passes,” he replied.
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1:49
‘Disabled people thrown under the bus’
A total of 86 charities united yesterday to call on MPs to reject the reforms, saying they will harm disabled people and calling it “a political choice”.
The likes of Oxfam, Child Action Poverty Group, Mind and Shelter said the bill has been brought to a vote without consulting disabled people and without any assessment “of its impact on health and employment outcomes”.
When asked to name “a single” disability organisation in favour of the reforms, Ms Kendall declined to do so.
Several Labour MPs indicated they would still vote against the changes, leaving the government in the dark over how big a rebellion it still may face.
Ms Kendall tried to allay their fears, telling MPs: “I believe we have a fair package, a package that protects existing claimants because they’ve come to rely on that support.”
Richard Burgon presented a petition to parliament yesterday evening against the cuts, signed by more than 77,000 people.
Several Labour MPs questioned why the vote was going ahead before the review into PIP is published – including Rachael Maskell, who said she could not “countenance sick and disabled people being denied support” and added: “It is a matter of conscience.”
Connor Naismith said the concessions “undoubtedly improve efforts to secure welfare reform which is fair”, but added: “Unfortunately, I do not believe these concessions yet go far enough.”
Image: Labour rebel Nadia Whittome said the government was ‘ignoring’ disabled people
Nadia Whittome accused the government of “ignoring” disabled people and urged ministers to go “back to the drawing board”.
Ian Byrne told the Commons he will vote against the “cruel cuts” to disability benefits because the “so-called concessions go nowhere near far enough”.
The vote will take place this evening, with coverage on Sky News’ Politics Hub live blog and on TV.
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