Jeremy Hunt has said he did not opt for “crowd-pleasing taxes” in his autumn statement as a pre-election giveaway, adding the government’s “long-term goal” is to boost the economy.
Talking on ITV’s Good Morning Britain, the chancellor defended his decision to cut national insurance by 2p despite calls from the right of the party to cut inheritance tax or income tax, which has been frozen since 2021.
Hunt said: “I could have chosen, you know, crowd-pleasing taxes. I could have unfrozen some of those [income tax] thresholds, I could have done things like inheritance tax. I chose to cut the taxes that will make the best long-term difference to our growth and prosperity.
“Those aren’t necessarily the taxes on the tip of everyone’s tongue but they are the taxes that will make the biggest difference to our long-term prosperity.”
Asked whether this was the best decision to help people struggling with the cost of living now, he said: “Well, those people have more money in their pockets next year even after the threshold freezes because of the 2% cut from 12% and 10% in employees’ national insurance … it’s very significant.
“Yesterday, I was able for the first time to start to bring down taxes. I am completely open about the fact it is only a start but it’s the right thing to do. And by cutting employees’ national insurance that will make a real difference to families up and down the country.
“But I’ve also done things that will help secure high-quality jobs for the future. Help make sure we have money for the NHS and future by doing things that help our long-term growth.
“I had 200 businesses writing to me saying the single most transformational thing I can do for our growth as a country is to change the capital allowances. That’s not a tax that everyone is talking about, but it makes a big difference to our growth and prosperity in the future.
From January, people’s energy bills will also increase as Ofgem has raised the price cap by 5%. Hunt said the measures including the increase to benefits, pensions and the “national living wage” announced in the autumn statement would make a “big difference”.
Rachel Reeves, the shadow chancellor, said the increase in energy bills would absorb the money people got from the tax cuts. “The announcements today about energy bills are obviously going to be concerning, and already some of those tax cuts announced yesterday are going to disappear before they even have arrived in these higher bills.”
Labour would close some of those “tax loopholes” on the bonuses that private equity bosses pay or non-doms to generate money for public services, she said.
Reeves said Labour would not make the same mistake the Conservatives made last year to announce tax cuts without saying where the money was going to come from, which caused “huge economic turbulence”.
Hunt said: “We have increased benefits by 6.7%, which is double what next year’s expected inflation is going to be, that’s about £400. For pensioners, we’ve increased the state pension by three times next year’s inflation, so that’s about £900, and for people on the national living wage, the lowest that you can legally pay someone increased to £11.44, which means that if they’re working full-time, they will get an extra £1,800.
“So I think taken together you can see there are a lot of things that will help people with cost of living pressures as well as … promote growth and the long-term prospects and our long-term prosperity.”
