Chancellor Jeremy Hunt weighing up £35bn in spending cuts
Chancellor Jeremy Hunt is said to be preparing up to £60 billion in tax rises and spending cuts as he navigates “difficult decisions” on the UK’s battered public finances.
Treasury sources confirmed that as much as £35 billion of the “fiscal tightening” could come in the form of a reduction in spending, signalling a further squeeze on hard-pressed services.
Ministers must present the key points of the plan to the Office for Budget Responsibility (OBR) so that it can prepare its economic forecast in time for the autumn statement on November 17.
So far, the contents of the budget have been subject to much speculation – with rises in capital gains and dividends taxes understood to be on the table, while major infrastructure projects including a major high-speed rail line are under review.
Cabinet minister Grant Shapps also hinted that the windfall tax on oil and gas giants could be expanded.
Asked about the prospect on Monday, he told Sky News: “I think that might be a clever way of asking me what’s in the autumn statement again, but we will be setting that out, the Chancellor will be setting that out, very shortly.”
He also refused to be drawn on whether he believes the triple pensions lock is a matter of Tory principle, as No 10 has neglected to commit to keeping the guarantee.
Mr Hunt’s room for manoeuvre has become more constricted after the Bank of England warned last week that the country is facing the longest recession in more than a century.
The Cabinet Office Minister Oliver Dowden previously acknowledged that there would have to be “difficult decisions” on both tax and spending.
“We are going to have to face difficult decisions both on the tax side – we haven’t got to the end of the difficult decisions there – and difficult decisions on the spending side,” he told Sky News.
“Now, of course, in terms of the specific decisions that will be made, that conversation is ongoing between the Prime Minister and the Chancellor.
“We need to bear down on spending first and eliminate waste, excessive spending and only go to tax rises if it’s the last resort but given the difficulty of the public finances, there is likely to be a mix of the two.”
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Cuts, Cuts, Cuts – eventually there will be nothing left to cut, services will just have shut. Many have already shut down, libraries, swimming pools etc. but before long it will be major services that will go. Cuts just lead to poorer communities, it’s not the answer.
I think that Oliver Dowling summed up the Market Fundamentalist, small government, low tax agenda nicely: “We need to bear down on spending first and eliminate waste, excessive spending and only go to tax rises if it’s the last resort“. The only waste is in things like Crony Contracts (Eg. Track & Trace) so those will not be cut. It will be Social Security that takes the hit since the past and present Cabinet are of thr view that “the British are among the worst idlers in the world” so the sick and disabled should be out there taking jobs.… Read more »
These guys (and dames) are fixated on costs where they appear on services like health, education but just can’t bear facing up to the waste when they dish out contracts not only to donors and cronies but to the big corporates which fill them with awe (and a spot of envy as well). We are all aware of the expenses associated with vanity projects. These contain costs that are justifiable had the project been a valid choice in the first place. However the increments that bump up project costs are often greater than the original core costs. HS2 is a… Read more »
There are several different ways to crash an economy. Austerity 1.0 was obviously one, from which the Tories have learnt nothing. Trussonomics another. Now we have Huntonomics – Austerity 2.0. The reductions in liquidity that will follow the imminent cuts and tax increases will be unhelpful for business – causing bankruptcies and/or cashflow difficulties – and devastating for many households. It was shameful that so many families and households were allowed to exist in poverty for so long prior to 2011 and since. Now we are allowing unemployment, low wages and inadequate benefits to be compounded by a government that… Read more »