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Everything we learnt about Jeremy Hunt’s ‘prudent’ budget from Sunday interviews

The chancellor will give unveil his budget on Wednesday amid months of pre-brieifing and gloomy economic forecasts

Zoe Grunewald
Sunday 03 March 2024 11:08 GMT
Mr Hunt’s budget is widely expected to contain some tax cuts and minimal public spending increases

As the government prepares to unveil it’s last Spring budget before a general election, the chancellor Jeremy Hunt had his annual pre-statement grilling on the Sunday news shows.

It is widely expected that Mr Hunt will look to cut taxes and commit to minimal public spending increases as the conservatives commit a last-ditch attempt to win back the electorate.

But recent OBR forecasts have given the chancellor less headroom for tax cuts than previously thought, leading the chancellor to dampen expectations around the sort of tax reductions the public can expect.

Chancellor Jeremy Hunt said he ‘won’t take risks’ with the UK economy (PA Wire)

Here’s a look at everything else the chancellor hinted would likely come up in Wednesday’s budget.

The government has made progress on the economy

We can expect the chancellor to say the government has made good progress on the economy, as he pointed to reducing inflation and the downgraded “technical” recession.

On the BBC’s show with Laura Kuennsberg, Mr Hunt said inflation had fallen from 11 per cent when Rishi Sunak became prime minister to it’s current level of 4 per cent, telling Ms Kuennsberg: “it’s fallen much faster than people predicted”.

Despite the UK officially entering a technical recession last month, Mr Hunt said the recession is “much more healthy” than the Bank of England had previously thought.

He added that the economy has been “much, much more resilient than people predicted”.

The Bank of England said the UK fell into a ‘technical recession’ last month (PA Wire)

No radical tax-cuts

Though the chancellor is a keen proponent of tax cuts, he made it clear that the government will not be committing to any radical tax reductions and was keen to manage expectations around the sort of tax-cuts that can be expected.

Talking to Sky News’ Sunday Morning with Trevor Phillips, Mr Hunt said:

“When it comes to tax cuts, I do believe that if you look around the world, countries with lower tax tend to grow faster — North America, Asia — and so I do think in the long run we need to move back to being a lower taxed, more lightly regulated economy.”

But he cautioned:

“It would be deeply unconservative to cut taxes in a way that increased borrowing, wasn’t fully funded.

“If I think of the great tax-cutting budgets of the past, Nigel Lawson’s budget in 1988 — the reason that was so significant is because those tax cuts were permanent.

“People need to know that these are tax cuts you can really afford, so it will be responsible and everything I do will be affordable.”

Though the chancellor would not be drawn into what specific tax cuts the government is considering it is widely tipped that they may introduce further cuts to national insurance or income tax.

Jeremy Hunt has said he hoped to “make some progress on that journey” of cutting taxes, describing the 2p cut to national insurance at the autumn statement as a “turning point”.

Talking to Sky News he said: “All conservatives believe that the state has a moral duty to leave as much money in people’s pockets as possible because it belongs to the people who earn that money.”

Fiscal rules are here to stay

Despite opposition from the former Bank of England chief economist, Andy Haldane, Jeremy Hunt insisted that fiscal rules are here to stay.

The sustainable investment rule aims to keep debt at a level that does not prove unsustainable or unfair to future generations.

Mr Haldane told the BBC that he wanted to hear that “fiscal rules might be tweaked” as “they’re stuning growth for me right now”.

He explained that the government’s own self-imposed rules around debt is “constraining our capacity to invest as a nation and therefore grow tomorrow”.

However, Mr Hunt insisted that he would not alter the fiscal rules “because I think people would interpret that as Britain losing control of its finances”.

He told the BBC: “The reason we have them is to give confidence to the British people and to the world that we are a country that pays back our debt. And if we didn’t have them, people would worry that Britain was going to go on an endless borrowing binge.”

Hunt economic adviser Andy Haldane has called for the fiscale rules to be ‘tweaked’ (PA)

There will be “no gimmicks”

Mr Hunt insisted that his budget would be a “responsible” centred on a long-term plan for economic growth.

When asked by Ms Kuennsberg if Mr Hunt was considering scrapping the non-dom tax scheme to fund small tax-cuts, the chancellor said the country “sees through gimmicks and we are not going to do gimmicks on Wednesday”.

Though Mr Hunt did not rule out stealing the Labour policy, he suggested that all measures taken would be long-term policies as opposed to short-term fixes.

Focus on public service “productivity” to unlock money

The government have already announced it is undertaking a “public sector productivity drive” in a bid to improve services without ramping up government spending.

The announcement features a number of cost-saving measures, including the implementation of artificial intelligence and digitisation across government and the creation of 200 additional child social care places in England.

Mr Hunt expanded on announcement this morning, telling the BBC that “we have to think not about the money we’re putting in but whether we can do things more efficiently so that we get more out”.

Thus far, Mr Hunt has indicated that the government will not be engaging in any mass public sector spending programmes and will instead free up money by looking to eliminate Whitehall waste and focus on improving productivity and efficiency.

There will be minimal public spending increases

Despite squeezed public services, Mr Hunt has maintained that the government will not commit to any mass public-sector spending programmes.

The chancellor told the BBC that he didn’t believe in “forever expanding the welfare state” because “I don’t think that’s compatible with bringing the tax burden down in a society that makes work pay”.

Last month left-wing thinktank the Resolution Foundation warned that the chancellor’s current spending projections mean that increasing day-to-day spending on public services by 1 per cent was a “fiscal fiction”.

It explained that given health, education and defence budgets are all protected, unprotected departments, such as the Home Office, MoJ and local government will see per capita cuts of 17 per cent by 2028-29.

On Times Radio, Mr Hunt said “It’s wrong to say the only way to improve public services is by putting more money in”.

When asked if the government wouldn’t spend more, Mr Hunt said it was “the wrong question to ask”, but notably refused to answer if public services were in a good state right now.

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