Hunt says pain today needed to fix economy for tomorrow

With inflation yesterday hitting a 41-year high of 11.1 per cent, Mr Hunt will identify the cost of living as the Government’s principal “enemy”.

But the package of spending cuts and tax increases, which he says are part of a “balanced path to stability”, looks set to stir up Tory infighting, creating the kind of political uncertainty that is punished by the very financial markets he is seeking to reassure. 

Former Tory minister Esther McVey yesterday said tax rises were “the last thing for a Conservative Government to do”, and she wouldn’t back them if ministers pushed ahead with the £100billion HS2 high speed rail link.

“I for one won't support them,” she said at PMQs, adding:

“Given we have the highest burden of taxation in living memory, it is clear the Government's financial difficulties are caused by overspending and not due to under-taxing.”

Former Levelling Up Secretary Simon Clarke also warned the Chancellor last night not to “throw the baby out with the bathwater and overcorrect” the mistakes made in Liz Truss’s mini-budget in September by imposing too many tax hikes.

Mr Hunt will try to allay the criticism by addressing the powerful 1922 Committee of Tory backbenchers after he speaks to the Commons at around 1130am today. 

Mr Hunt, who has said “everyone” will have to pay more tax, is expected to freezing the thresholds at which workers begin paying higher rates of income tax in England and Wales so that more people are drawn into the higher brackets as their wages rise.

Other measures include higher council tax bills south of the border, lowering the top rate of income tax threshold from £150,000 to £125,000, extending the windfall tax on oil and gas giants to electricity generators, scaling back the support for energy bills from April, a higher minimum wage, and increasing benefits and state pensions in line with inflation. 

Like the Prime Minister, the Chancellor will insist his strategy “protects our long-term economic growth” while being “compassionate” to the most vulnerable in society.

He will warn “high inflation is the enemy of stability” as it sends food and fuel bills soaring, causes businesses to fail and raises unemployment.

“It erodes savings, causes industrial unrest, and cuts funding for public services. It hurts the poorest the most and eats away at the trust upon which a strong society is built,” he will say.

“Families across Britain make sacrifices every day to live within their means, and so too must governments because the United Kingdom will always pay its way.

“We are taking a balanced path to stability: tackling the inflation that eats away at a pensioner’s savings and increases the cost of mortgages to families, at the same time supporting the economy to recover. But it depends on taking difficult decisions now.”

Forecasts from the Office for Budget Responsibility will also come out today, with the economic outlook likely to be bleak as the UK enters recession.

Mr Hunt’s predecessor, Kwasi Kwarteng, rejected the offer on an OBR analysis on his mini-budget, and its absence spooked the financial markets.

Traders feared the mini-budget’s tax cuts would push up inflation, just as the Bank of England was trying to bring it down by raising interest rates.

Mr Hunt will say his policies will “work together” with the Bank’s interest rate-rising, as he “makes sacrifices” to find up to £60 billion.

The budget and OBR numbers will directly inform the Scottish Government’s budget for 2023/24, which is due on December 15.

Labour shadow chancellor Rachel Reeves said: “The country is being held back by 12 years of Tory economic failure and wasted opportunities and working people are paying the price.

“What Britain needs in the Autumn Statement today are fairer choices for working people, and a proper plan for growth.”

SNP shadow chancellor Alison Thewliss, the MP for Glasgow Central, said people were “paying through their teeth for Tory incompetence" and said it was essential that the Chancellor scrapped his plans for "austerity 2.0". 

She said: "With the Chancellor planning another wave of devastating austerity, independence is the only way to keep Scotland safe from Tory cuts and Brexit decline.

"There's no escape from the economic crisis under Westminster control, with the Tories and Labour Party both wedded to Brexit and the long-term economic damage it is causing. Scotland's only route to prosperity is to become an independent country."

Liberal Democrat MP Christine Jardine called for a “proper windfall tax on the profits of the fossil fuel giants”, a Mortgage Protection Fund, and state benefits rising with inflation.

She said: "After inflicting so much chaos, the Conservatives are making the rest of us pay to clear up their mess. Struggling households face a triple whammy from energy bills, mortgages and the freezing of the personal allowance.

“Mortgages have skyrocketed, the economy has tanked and Downing Street is nothing more than a revolving door of chaos. Every day the Conservatives are in office, families and pensioners suffer.

“This SNP/ Green government also needs to focus on what really matters. They should stop distracting themselves with a bid to break up the UK and do far more to help families in crisis.

“We need a fair deal, including a boost to pensions and benefits. The government should bring in a proper windfall tax and make sure banks pay their fair share, instead of imposing years of painful stealth taxes on ordinary families.”

Scottish Green MSP Ross Greer added: “Hunt's Autumn statement will make things even worse for millions of people, and will act as a rallying call for independence.

“All the indicators suggest the Chancellor is set to impose some of the most devastating public service cuts for decades, with terrible consequences for families and businesses.

"This is a fundamental question of democracy. Scotland voted for none of this and yet our communities will be made to pay the price. Perhaps more than anything else, it illustrates in the starkest terms exactly why we need the powers of a normal independent nation.”