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Jeremy Hunt on Wednesday told the nation that he was “cutting taxes” and pushing the UK towards a brave new era of higher growth and prosperity.
However, official forecasts and figures released after his statement paint a very different picture.
Despite the Chancellor’s claims, these figures show that the British economy, public services and taxpayers’ pockets are set for a protracted period of pain for years more to come.
Here’s all the bad news the Chancellor didn’t want to tell us about today.
Low Growth for Years to Come
Rishi Sunak today claimed that his Government is “delivering” on growth thanks to the “difficult” decisions he has taken. However, the Government’s own Office for Budget Responsibility today confirmed that growth is actually expected to be lower than previously expected for most of the years in its forecast.
This means that the long-run of anaemic growth presided over by the Conservatives since 2010 is expected to continue even longer than previously thought.
Far from “turning the corner”, today’s forecast suggests that the British economy is set to remain at a dead end for some time to come.
Taxes Will Rise to a New High
“Conservatives cut your taxes”, Jeremy Hunt insisted today as he announced plans for cuts to National Insurance.
However, according to the Government’s own figures, the overall tax burden paid by taxpayers in the coming years is actually going to increase.
Thanks to the extension of so-called ‘fiscal drag’ caused by the Government’s decision to freeze tax thresholds, the overall tax burden will now rise to its highest level since the Second World War.
These rises mean that according to analysis by the Institute for Fiscal Studies, taxes are set to rise by a larger amount in this parliament than in any other in post-war history.
“The overall effect of the tax changes we’ve seen is that for most people, this is still going to be a tax rise” the IFS Director Paul Johnson said.
Living Standards Will Continue to Fall
Despite Hunt’s promise of a new era of prosperity under this Government, new OBR figures show that since 2019 the UK has experienced the biggest fall in living standards since records began in the 1950s.
And despite Sunak’s claim to be “delivering” on reducing rising living costs, today’s forecast shows that inflation is now expected to remain “higher for longer” than previously forecast, and will not reach the Bank of England’s target of 2% until a year later than previously expected.
The truth is that most will continue to feel worse off for some years yet.
Public Services Will be Slashed to Pay for Tax Cuts
Hunt’s statement confirms that his National Insurance cuts will be paid for by cuts to public spending.
The plans are predicated on a mere one per cent planned year on year increase in resource spending. For many departments that means real-terms cuts in expenditure with overall departmental budgets cut by £19 billion compared to plans last March.
As the OBR’s Richard Hughes said today: “The eagle-eyed amongst you will recognise that is roughly equal to the amount the chancellor spent on the two big tax cuts in this fiscal event.”
As part of this plan, the government plans to slash the size of the civil service, with job numbers being cut to levels last seen before the pandemic.
Looking at the government’s own plans released today, some departments are set for huge cuts to their budget on a scale that looks undeliverable.
‘Levelling Up’ will be Levelled Down
Hunt today claimed to be “levelling up” the country. However, according to the Government’s own figures, the Department for Levelling Up is set to see its resource spending budget slashed in half from around £4 billion last year to around £2 billion in 2024-25.
Other departments set for cuts include the Home Office, Culture Department and HMRC.
Overall Public Investment will be Cut
Sunak claimed last month that his Government is taking “long-term decisions for a brighter future.”
However, as the recent collapsing schools scandal has shown, there is little evidence of such long-term thinking under this Govenrment, when it comes to the state of the public realm.
The long-term lack of investment seen over the past decade is set to become even worse according to today’s Autumn Statement. Figures contained within it reveal that Hunt intends to implement a long-term cash freeze in public sector investment. This means that there will be significant real-terms cut in the amount of money being invested into public services under his plan for years more to come.