The government can only afford “a tiny tax cut here or a tiny cut there,” a respected economic think tank has said ahead of Wednesday’s statement.
Paul Johnson, director of the Institute for Fiscal Studies think tank, said any tax cuts would have to be followed by “incredibly tight spending plans”.
His comments came after prime minister Rishi Sunak delivered a speech earlier on Monday morning in which he suggesed taxes would be cut on Wednesday.
Earlier in the speech, Mr Sunak claimed handing over the UK economy to Labour would be “just as dangerous” as Liz Truss’s stewardship of the economy.
He claimed Keir Starmer and Rachel Reeves wanted to continue the “big government, big spending approach” of the Covid pandemic, pointing to the opposition’s £28bn green business plan.
“This makes the same economic mistake as last year’s mini-budget – blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts.”
Watch: David Cameron becomes Lord of Chipping Norton
Labour and Lib Dems ridicule five new pledges from Sunak
Responding to Rishi Sunak’s five new long-term economic pledges, Pat McFadden, Labour’s national campaign coordinator said: “The Tories have failed to deliver on so many pledges from the past.
“Why should people believe they will deliver on pledges for the future?” asked the Labour frontbencher.
He added: “It sums up this Conservative Party to claim things will be better tomorrow when they can’t even fix the problems of today.”
Liberal Democrat leader Ed Davey MP said that in failing to mention the NHS in the five new pledges, Mr Sunak “has shown yet again just how out of touch he is”.
Mr Davey added: “Shockingly, the prime minister doesn’t even understand the link between a better health service and a stronger economy.”
Low growth cause of high taxes, shadow business secretary says
The UK has hit the highest tax burden in 70 years because of “low growth”, shadow business secretary Jonathan Reynolds said.
“We’ve had low growth, that is the fundamental reason for that. I don’t think anyone right now thinks that services in the UK are so generously funded that taxes have risen to meet that need,” he said.
“There is simply no way that any political decision in the next government or the one after that can be anything other than extremely difficult, unless there is a significant step change in the performance of the economy.”
He added he would not speculate on possible tax cuts being announced by the Chancellor in the autumn statement on Wednesday.
Starmer in No 10 would be as dangerous as Liz Truss, says Rishi Sunak
Rishi Sunak has claimed handing over the economy to Keir Starmer would be “just as dangerous” as having Liz Truss in charge.
Outlining how he planned to cut taxes in a “responsible” way, ahead of Wednesday’s autumn statement, the prime minister claimed Sir Keir and Rachel Reeves wanted to continue the “big spending approach”, pointing to the opposition’s £28bn green business plan.
In an extraordinary attack on his predecessor’s policies, Mr Sunak then said Labour’s approach to spending would put Britain at the same risk as Ms Truss, who was ousted after big tax cuts which triggered an economic collapse.
“This makes the same economic mistake as last year’s mini-budget – blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts,” Mr Sunak said.
EU didn’t believe Boris Johnson’s ‘madman’ no-deal Brexit bluff
European Union negotiators did not believe Boris Johnson’s bluff that he was prepared to pull the UK out of the bloc with a “no deal” Brexit, Michel Barnier has revealed.
Adam Forrest reports:
Sunak and Hunt can only make ‘tiny tax cut’, says IFS
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said the chancellor can only afford “a tiny [tax] cut here or a tiny cut there” on Wednesday, Adam Forrest reports.
The respected economist told Times Radio that any tax cuts would have to be followed by “incredibly tight spending plans” – including cuts to public services.
Although Mr Hunt has been said to have enhanced fiscal “headroom” of around £25bn, the IFS director said Britain’s grim debt picture meant there was little to play with.
“There’s lots of speculation that against his rather strange target there’s a little bit more room for manoeuvre. But that’s not real,” said Mr Johnson.
Sunak: It’s time to cut tax to grow Britain’s economy
Adam Forrest has the full report:
City of London Corporation backs tax cuts
The City of London Corporation has welcomed signals from the government that it will cut taxes in Wednesday’s statement.
Chris Hayward, the corporation’s policy chairman, said it was vital to reduce the burden on households and keep UK businesses competitive.
“It’s right the government is looking at ways we can reduce the tax burden on households and businesses,” he said.
“A competitive tax regime is critical to the UK retaining its world-leading financial centre status.
“Our banking sector for instance already faces higher rates of tax compared to New York or Dublin.”
UK spending £1.5m on minibuses and electric vehicles for Albania prisons
Thirty-seven minibuses and electric vehicles have been provided to Albania by the Government at a cost of £1.5 million, as part of a recent deal to return Albanian prisoners.
The arrangement, announced in May, will see 200 Albanian nationals jailed in England and Wales sent home for the rest of their sentence.
Dominic McGrath reports:
Sunak: welfare system not sustainable
The welfare system is not currently “sustainable”, Rishi Sunak suggested when asked about a possible squeeze on welfare payments in the autumn statement.
Declining to “pre-empt” any announcements on Wednesday, the prime minister said: “Our view on the welfare system is that it should be compassionate, it should be fair and it should be sustainable…
“With over 2 million people of working age who are not currently working, that isn’t a good situation.
“It’s not sustainable for the country, for taxpayers. It’s not fair. But it’s also not compassionate to write people off.
“And over a decade we’ve seen the percentage of people who are essentially deemed not to be able to do any work has tripled. That doesn’t seem like a system that’s working properly. And that’s why we will look to make sure that the system is reformed and supports those who can work to do so.”