Inisters are determined to crack down on an “outrageous” waste of public money as they seek billions in tax hikes and savings, as the chancellor warned he will play Scrooge in the upcoming fall budget.
Jeremy Hunt has promised a “rabbit-free” statement with an emphasis on providing “security” to families and businesses in the wake of the market turmoil caused by his predecessor’s £45bn tax cuts.
He would consider a range of options to tackle a so-called black hole in public finances, with possible measures such as a comprehensive income tax freeze and national insurance thresholds.
But while Mr Hunt has warned there will be “terrible decisions” on taxes and spending, the Chief Secretary to the Treasury has said ministers will also look for savings by “wiping out waste”.
John Glen said the government could be made “more efficient” by accelerating the sale of underutilized buildings, especially “expensive buildings in central London”, and “turbo charging plans” to digitize public services.
He wrote in the Sunday Telegraph: “To continue to deliver the things people care about despite inflationary pressures, without exacerbating the problem with additional spending across the board, we need to make tough decisions and make government more efficient. That means eradicating waste.
“It’s outrageous that public money – your money – is being sucked into the system while it can be channeled into areas that really need it.”
While insisting that the British public wants the Tories to be trustworthy rather than “popular”, Mr Hunt said the hope for the coming week is to show the government has a plan to stabilize the economy.
In an interview with the Sunday Times, he said the “tragedy” of Trussonnomics was that both the former prime minister and her chancellor had the right idea about boosting growth.
But he said it was a “mistake” to act without showing that “we can pay for ourselves as a country”, adding that he will “put people before ideology”.
The disastrous mini-budget may have cost the country as much as £30bn, according to the Resolution Foundation, potentially doubling the job for the chancellor as he seeks up to £60bn in savings and additional revenue.
The think tank’s economists estimate that Liz Truss and Kwasi Kwarteng squandered £20 billion on unfunded cuts to national insurance and stamp duties, with another £10 billion lost to higher interest rates and government borrowing costs, The Observer reported. .
Mr Hunt suggested he won’t pull a rabbit out of his hat when he makes his statement next week, unlike his predecessor – who in his fateful “tax event” has dramatically cut the top rate of income tax.
“I think it’s fair to say that this will be the first rabbit-free budget in many years,” he said.
“Sorry to disappoint, but no, this is not the time for rabbits I’m afraid.”
He warned that people can expect some “very terrible decisions” as part of an effort to “bring us back to where we are the wonderful country we all want to be”.
“I’m Scrooge going to do things that will make sure Christmas is never cancelled,” he declared.
Mr Hunt said he thinks an official recession is “probable” after GDP contracted by 0.2% between July and September.
“The question isn’t really whether we’re in a recession, but what we can do to make it shorter and shallower,” he added.
He insisted that the “number one thing” he can do on Thursday is help tackle skyrocketing inflation.
“If, with the Bank of England, we can control inflation, then we will be able to contain the global rise in interest rates, the rises in mortgage rates that people are seeing, the cost of loans that companies borrow. , and have a chance to get back on track,” he said.
“But that stability is what has been lacking – mainly thanks to (Vladimir) Putin’s invasion of Ukraine. This is a ‘made in Russia’ recession and we need to restore that stability as the first step to growth.”
He also advocated ‘fair money’ and ‘honest politicians’.
“For conservatives, we all understand that a successful economy needs a dynamic economy, low taxes and sound money,” he said.
“But healthy money has to come first and, you know, Margaret Thatcher said there’s nothing moral about spending money you don’t have.”
As a sign of what will happen on Thursday, Mr Hunt said “those with the broadest shoulders will carry the heaviest burden”.
Lowering the threshold at which the highest earners start paying the highest tax rate is one of the options on the table.
But he indicated that a broader cohort will eventually be hit by a rise in energy costs, as the government cannot afford to take the sting out of their bills forever.
“We have to be honest with people — it’s not possible to subsidize people’s energy bills indefinitely,” he said.
According to The Sunday Times, average costs for most households are expected to rise when the first phase of the energy price guarantee expires in the spring.
But it suggested the chancellor may be considering a bailout package from April to protect the most vulnerable, including retirees and those on benefits.