CHANCELLOR Jeremy Hunt has warned it is ‘unlikely’ that there will be room for any ‘significant’ tax cuts in the Budget.
But Hunt said that a pledge to halve the rate of inflation ‘is the best tax cut right now’.
He admitted the UK was going through ‘a difficult patch’ but insisted the country ‘can get through it and we can get to the other side’.
Hunt set out a plan to help lift the UK’s economic growth.
After a turbulent autumn, when financial markets pushed up the country’s cost of borrowing, Hunt said he was determined to show that the UK was responsible.
That meant ‘showing the world that we can pay our way, that we can balance our books’, he said.
He added that ‘it is unlikely that we would have the room for any significant tax cuts’ at the Budget in March.
Government borrowing – which is the difference between spending and tax income – rose to a record £27.4bn in December. It was the highest amount for that month since 1993.
Borrowing was driven by the cost of helping households and businesses with rising energy bills. Higher inflation also pushed up interest payments on debt owed by the government.
The rate of price rises – or inflation – has begun to slow but at 10.5%, remains close to a 40-year high.
On tax cuts Hunt said: ‘The biggest tax cut that we can give the British people is to halve inflation, that means the value of their weekly shop won’t continue to go up, the value of their pay packet won’t continue to be eroded and that’s what we are focused on.’
The Chancellor also unveiled a plan to grow the UK economy, though it drew a mixed reaction with some business groups criticising a lack of detail.
He said the strategy would focus on four pillars or ‘four Es’: enterprise, education, employment and everywhere.
But the Institute of Directors (IoD) suggested Hunt should add a fifth E for ‘empty’, after not issuing any concrete plans in his first major speech since becoming Chancellor three months ago.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said ‘detail is sorely lacking’ in Hunt’s plan. She said the architects of the plan are ‘clearly unsure how it will be paid for’.
And Make UK, which represents the manufacturing industry, said: ‘We have to be honest that there have been some hugely damaging big picture issues caused by the absence of an industrial strategy which are impacting on some of our strategic sectors.’
Liberal Democrat MP Sarah Olney said: ‘Jeremy Hunt’s speech is cold comfort for families and pensioners facing unbearable price rises.’
Labour’s shadow chancellor Rachel Reeves said that ‘13 years of Tory economic failure have left living standards and growth on the floor, crashed our economy, and driven up mortgages and bills.’
‘The Tories have no plan for now, and no plan for the future’, she added.
According to official statistics car production in the UK is at its lowest level since 1956.
What is left of Britain’s steel industry is on the brink of collapse after years of sell-offs and in the next year, household incomes are forecast to fall by 4.5% – the greatest slump since the 1950s.
These facts confound Jeremy Hunt’s utopian predictions for a UK economy that can become a hi-tech world leader.
Unite General Secretary Sharon Graham said ‘Jeremy Hunt’s ‘With one leap Jack was free’ economics are fanciful and will not work.
‘Tax cuts for profiteering billionaires won’t reverse the national pay cut, save the NHS, revive British industry or avoid Austerity mk 2. This government urgently needs to make different choices. Those who gain most must pay most.’
