Jeremy Hunt has acknowledged the challenging choices he will need to make before the autumn statement, as he contemplates potential decreases in benefits and a reduction in inheritance tax.
The chancellor is reportedly contemplating reducing benefits by £2 billion, which may involve denying free prescriptions and discounted bus travel to unemployed individuals who are not actively seeking employment.
According to the chancellor, individuals who are not actively seeking employment will have their benefits altered after six months, as outlined in the upcoming statement.
In September, the Secretary of Work and Pensions, Mel Stride, announced that disabled individuals would be required to search for employment opportunities that can be done from their homes. This may lead to a reduction of up to £4,680 per year in their benefits.
On Wednesday, Hunt will give his autumn statement, possibly his last one before the upcoming general election in the following year.
During a visit to Milton Keynes on Saturday, the chancellor addressed broadcasters and stated that their wait for his decisions would continue until Wednesday. He emphasized that there is no simple solution to reducing the tax burden and that difficult choices must be made in order to reform the welfare system.
When discussing taxes, I am aware that there has been much speculation. Rest assured, we will not take any actions that would jeopardize our efforts to combat inflation.
“This week, we have achieved a 50% reduction in inflation since I became chancellor and Rishi Sunak became prime minister. This is the most significant accomplishment we have made and we will not take any actions that could compromise this progress.”
According to Hunt, in an interview with the Telegraph on Saturday, the economy has reached a “turning point” as inflation has dropped below 5% for the first time in two years.
There is speculation that he may be contemplating a reduction in the inheritance tax, which is only paid by a small fraction of estates (less than 4%). He stated this could be feasible due to decreasing borrowing expenses and increasing tax income.
Campaigning to reduce or eliminate inheritance tax has been a longstanding goal for certain members and supporters of the Conservative party. Taking action before the upcoming general election, anticipated to occur next year, may be an effort to attract hesitant Tory voters and gain their support in the election.
According to The Times, Hunt is contemplating lowering the rate from 40% to either 30% or 20%, and could potentially eliminate it completely in the upcoming Conservative manifesto.
The most recent polls indicate that Sunak’s party is trailing behind Labour by 20 points, potentially resulting in a significant win for the opposition after 13 years of Conservative leadership.
Former Chancellor under John Major, Ken Clarke, stated that although eliminating inheritance tax may pacify certain Conservative MPs on the party’s right wing, it would face strong disapproval.
He stated on Times Radio: “It’s not the tax reduction I would prefer. In fact, I’m uncertain if he has any leeway for tax cuts.”
“Opting for inheritance tax currently may be attractive to the Conservative party’s more conservative members, but it also opens them up to severe criticism as inflation and economic conditions leave vulnerable citizens in our country. This action would provide tax breaks to wealthy families who have members with assets above the limit and who would therefore pay a significant amount of taxes through inheritance.”
“I am uncertain if the current economic and financial situation of the country warrants it.”