Ministers are determined to crack down on an “outrageous” waste of public money while seeking billions in tax hikes and savings as the Chancellor warned he will be playing Scrooge at the upcoming autumn budget.
Jeremy Hunt has promised a “rabbit-free” statement with a focus on delivering “certainty” to families and businesses in the wake of the market turmoil sparked by his predecessor’s £45 billion tax-cutting bonanza.
He is thought to be considering a range of options to address a so-called black hole in the public finances, including an extended freeze on income tax and national insurance thresholds.
But while Mr Hunt has warned there will be “horrible decisions” on tax and spending to come, the Chief Secretary to the Treasury has said ministers will also be seeking savings through “rooting out waste”.
John Glen said Government could be made “more efficient” by accelerating the sale of under-used buildings, particularly “expensive central London properties”, and “turbo-charging” plans to digitise public services.
Writing in the Sunday Telegraph, he said: “To continue delivering the things people care about in the face of inflationary pressures, without making the problem worse through extra spending across the board, we have to take difficult decisions and make Government more efficient. That means rooting out waste.
“It’s outrageous that public money – your money – is being soaked up by the system when it could be channelled towards areas that really need it.”
Insisting the British public want the Tories to be trustworthy rather than “popular”, Mr Hunt said the hope for the week ahead is to show the Government has a plan to stabilise the economy.
"Around a third of the world's economy is in recession this year or will be in recession next year & that is principally, but not entirely, because of very high energy prices. We are not immune to that in the UK".
— HM Treasury (@hmtreasury) November 11, 2022
In an interview with the Sunday Times, he said the “tragedy” of Trussonomics was that both the former PM and her chancellor had the right idea about boosting growth.
But he said it was a “mistake” to act without showing “we can pay our way as a country”, adding that he will “put people ahead of ideology”.
The disastrous mini-budget may have cost the country as much as £30 billion, according to the Resolution Foundation, potentially doubling the task at hand for the Chancellor, as he seeks up to £60 billion in savings and extra revenue.
The think tank’s economists estimate that Liz Truss and Kwasi Kwarteng blew £20 billion on unfunded cuts to national insurance and stamp duty, with a further £10 billion lost to higher interest rates and Government borrowing costs, the Observer reported.
Mr Hunt suggested he will not be pulling any rabbits out of the hat when he delivers his statement next week, unlike his predecessor – who dramatically whipped out a cut to the top rate of income tax in his ill-fated “fiscal event”.
“I think it is fair to say this is going to be the first rabbit-free budget for very many years,” he said.
“I’m sorry to disappoint but no, this is not going to be a time for rabbits I’m afraid.”
He warned people can expect some “very horrible decisions” as part of a bid to “get us back into the place where we are the fantastic country that we all want to be”.
“I’m Scrooge who’s going to do things that make sure Christmas is never cancelled,” he declared.
Mr Hunt said he thinks an official recession is “likely” after GDP shrank by 0.2% between July and September.
“The question is not really whether we’re in recession, but what we can do to make it shorter and shallower,” he added.
He insisted the “number one thing” he can do on Thursday is help tackle sky-high inflation.
“If we can, with the Bank of England, control inflation, then we will be able to contain the global rise in interest rates, contain the rises in mortgage rates that people are seeing, contain the cost of loans that businesses borrow, and have a chance of getting back on track,” he said.
“But that stability is what has been missing — 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 made the case for “honest money” and “honest politicians”.
“For Conservatives, we all understand that a successful economy, a dynamic economy, needs to have low taxes and sound money,” he said.
“But sound money has to come first and, you know, Margaret Thatcher said there’s nothing moral about spending money you don’t have.”
In a sign of what is to come on Thursday, Mr Hunt said “people with the broadest shoulders will bear the heaviest burden”.
It is understood a cut to the threshold at which the highest earners start paying the top rate of tax is among the options on the table.
But he indicated a wider cohort will eventually be hit by a hike 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 subsidise people’s energy bills indefinitely,” he said.
The Sunday Times said average costs are expected to rise for most households when the initial phase of the energy price guarantee comes to an end in the spring – with the scheme extended by another six months with just a third of the prior funding.
But it suggested the Chancellor is looking at a package of support to shield the most vulnerable, including pensioners and those on benefits, from April.
A Treasury spokeswoman said: “Our number one priority is economic stability and restoring confidence that the United Kingdom is a country that pays its way.
“The Chancellor will set out a plan to see debt falling as part of the Autumn Statement on November 17, alongside a full OBR forecast.
“The Prime Minister and Chancellor have been clear that this will require some difficult decisions, but protecting public services and the most vulnerable will be prioritised.”
The department has refused to comment on “speculation” around tax changes outside of fiscal events.