Deputy First Minister Shona Robison has urged the Chancellor not to cut taxes when he sets out his spending plans for the year ahead in Wednesday’s Autumn Statement.

The Scottish Government Finance Secretary said Jeremy Hunt should use any extra fiscal headroom to “deliver more funding for public services, net zero and cost of living support.”

She also cautioned against using last week's fall in inflation to squeeze benefits. 

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The Chancellor is under huge pressure from his own party to cut taxes ahead of the general election, expected at some point in the next year.

Yesterday morning, in a round of broadcast interviews, the Chancellor said “Everything is on the table in an autumn statement.”

However, he also promised he would not do anything that could fuel inflation.

He said any tax cut would have to be done in a responsible way and was "not going to happen overnight”.

“I won’t do any kind of tax cut that fuels inflation. We’ve done all this hard work. We’re not going to throw that away,” he said.

He added: “We need to show there’s a path to a lower tax economy.”

Reports suggest the Chancellor could slash inheritance tax. Currently, the levy is charged at 40% on a person’s estate above the threshold which currently sits at £325,000.

Married couples can share their allowance, meaning parents can pass on £1 million to their children without any tax being paid.

In 2021/22 estimates suggest that the tax was paid on 37,000 estates at death in 2021/22, which represents less than 5% of all deaths, raising £6.1 billion.

Though it affects only a relatively small proportion of the population, polling suggest it is deeply unpopular.

The Chancellor is considering reducing the rate from 40% to either 30% or 20%, with a promise to abolish it altogether in the next Tory manifesto.

Mr Hunt also warned that there would need to be “difficult decisions” on welfare spending.

Reports last week suggested the Chancellor could increase benefits by 4.6%, the current rate of inflation, rather than, as expected, September's rate of 6.7%.

While this would save the government £2bn, it would hit an estimated 9m households and cost single mothers an estimated £218 a year.

Mr Hunt told Sky News’s Trevor Phillips: “One thing I want to be very clear about, there’s no easy way to reduce the tax burden. What we need to do is take difficult decisions to reform the welfare state and to make public services more productive and more efficient.”

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Ahead of the fiscal statement, Ms Robison set out a number of key demands from the devolved administration. 

She called on Mr Hunt to increase the Scottish Government’s capital budget in line with inflation and to deliver additional funding across the UK to “fund public services and fair public sector pay awards.”

She also urged him to “prioritise investment in net zero, including funding for offshore wind projects in Scotland.”

Ms Robison said: “The UK faces a combination of low growth and high-interest rates. The Autumn Statement must learn the lessons from last year’s ‘mini budget’ – it must not compound these problems with ill-timed tax breaks which would place even greater pressure on the public finances.

“The Scottish Government is using the levers available to us to support people through this difficult time. 

“However, it is important that the UK Government uses its full range of reserved powers to address these challenges. With many families continuing to struggle with the cost of living, the Chancellor must not use this statement to cut benefits.

“The Autumn Statement provides an important opportunity for the UK Government to support us to deliver the investment and services that Scotland needs, to demonstrate its commitment to net zero, and to help people and businesses with the economic challenges they face.”

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Speaking to the BBC’s Laura Kuenssberg, Shadow Chancellor Rachel Reeves said: “Cutting inheritance tax in the middle of a massive cost-of-living crisis and when public services are on their knees is not the right priority.

“I understand people’s desire to pass on to their children what they have worked hard for, but right now that is not the right thing to do and we would not support it.”

Ms Reeves said benefits should rise by the September figure, adding: “If you pick and choose from year to year which inflation number is the cheapest thing to do, then what you see is the gradual erosion of people’s incomes.”