Expectations are growing that Jeremy Hunt will unveil tax cuts on Wednesday, with an autumn statement that will also see welfare reforms aimed at pushing benefits claimants back into the workplace.
It comes after Rishi Sunak used a speech on Monday to promise tax cuts and pledged to “reward hard work” in what appeared a clear signal of intent ahead of the autumn statement.
Mr Hunt will use his address to MPs to put that rhetoric into practise, with the Chancellor expected to announce a benefits shake-up that would see those with mental health or mobility problems told to search for work which is possible to do from home.
According to The Times, people could see their benefits reduced by £4,680 a year from 2025 as part of a significant tightening of welfare rules.
The Department for Work and Pensions put out a consultation on the proposals in September and would be the latest bid by the Government to get hundreds of thousands of people back into work.
The potential move comes as Tory MPs look forward to the prospect of tax giveaways, a result of improved forecasts for the public finances and a significant drop in inflation in recent months.
The exact nature of any tax cut remains the subject of speculation, but changes to income tax or national insurance have reportedly been considered.
But Mr Sunak also offered a note of caution, warning that the UK’s historically high tax burden would be reduced “in a serious, responsible way, based on fiscal rules to deliver sound money”.
“We can’t do everything all at once,” he said.
The Governor of the Bank of England Andrew Bailey offered his own warning about the state of the economy on Monday, saying it is “much too early” to say inflation has been beaten.
While Mr Sunak has met his own pledge of halving inflation in 2023, the rate of the Consumer Prices Index is still well above the Bank of England’s 2% target.
Elsewhere, the BBC reported that Mr Hunt is poised to abolish VAT on reusable period underwear, a move long demanded by campaigners. Universities will also receive a £20 million investment to help them “spin out” research into commercial businesses.
The Government will spend more than £300 million to “unlock” £50 billion in capital from British pension funds, the Treasury has already confirmed.
Shadow chancellor Rachel Reeves told Labour MPs on Monday night that there is little Mr Hunt can do to “distract” from the Conservatives’ failures on the economy.
Addressing the parliamentary party, she said: “After 13 years, the Conservatives have already failed on the economy. Taxes are higher, debt is higher, mortgages are higher and prices are still rising in the shops. The economy is not working.
“Nothing that the Chancellor does this week will change this or distract from their appalling record.”