Mr Hunt is said to be considering halving the headline rate of inheritance tax to 20 per cent (Image: Getty/Carl Court)
He promised an “Autumn Statement for growth” and pledged to “spread this prosperity across the UK”.
The Treasury is betting that if it can turbo-charge productivity in the public sector this will clear the way for tax cuts. It believes that measures to slash admin could free up more than 38 million police hours each year and cut a teacher’s workload by up to five hours a week.
Mr Hunt wants to torch red tape by unleashing the power of Artificial Intelligence. The Treasury claims some public sector workers spend up to eight hours a week on administrative tasks that may not be necessary.
The Chancellor told the Sunday Express that changes would result in “more time for teachers to teach our kids, for nurses to treat us when we’re sick and for police to keep us safe”.
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He is determined to get “over a million people into work” and is prepared to use “tough new sanctions for those who refuse a job”.
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But he can expect a major political row if he cuts inheritance tax while squeezing benefits. He has warned there is “no easy way to reduce the tax burden” and that the Government needed to “take difficult decisions to reform the welfare state”.
There is speculation that instead of uprating working-age benefits by the September inflation figure of 6.7 per cent they will rise by the October rate of 4.6 per cent.
The Resolution Foundation think tank warned against “moving the goalposts”, saying this would “hit the incomes of nine million families, with some losing as much as ￡500 a year”.
Louise Murphy, an economist with the think tank, said: “The context for this important decision facing the Chancellor is a cost of living crisis that is really a cost of essentials crisis, as energy and food bills have soared. Tough times for everyone are already toughest for low and middle income Britain.”
Mr Hunt is also said to be considering halving the headline rate of inheritance tax from 40 per cent to 20 percent.
The Institute for Fiscal Studies said the top fifth of earners are “about eight times more likely to benefit from a cut to the inheritance tax rate than those in the bottom fifth of earners”. It said that rumoured cut would “give away an average of ￡180,000 to the top five per cent of estates at death”.
However, the Chancellor is under intense pressure to restore the Conservatives’ reputation as a party of low taxation. The tax burden is expected to hit a seven-decade high and Mr Hunt has said the Government needs to “bring that down”.
Conservative MP Jake Berry said Wednesday’s Autumn Statement was a “chance to stop the cycle of ever-increasing taxes and to show that as Conservatives, we believe people deserve to keep more of their own money”.
He said: “People don’t go out to work just to give money to the Government.”
A former minister urged Mr Hunt not to put off tax cuts, saying: “Nobody wants jam tomorrow. It is not very palatable.”
Conservative MP Jake Berry “People don’t go out to work just to give money to the Government.” (Image: Getty/Rob Pinney)
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John Longworth, who chairs the Independent Business Network, pressed for action, saying: “Businesses up and down the country are crying out for an enterprise and growth environment.”
He called for reversals to corporation tax, a rise in the small business VAT threshold to ￡250,000 and a cut to stamp duty to boost the housing market.
Mr Longworth suggested that personal tax cuts could be pursued in the spring Budget.
Some “red wall” Conservatives are convinced the Treasury has more elbow-room that it expected and can afford to give tax cuts that go beyond adjusting inheritance tax and helping wealthy earners. They see the Autumn Statement as a test of whether the party leadership is more focused on wooing voters in the more affluent south of England than on boosting the fortunes of workers in less prosperous regions.
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A Tory said: “The cat is out of the bag; there is a lot more money for tax cuts than expected. The choice of where they fall will give away the Government’s new strategy.
“If the flagship announcements are inheritance tax and higher rate thresholds, we’ll know Rishi and Hunt intend to sell us down the river to pursue their southern strategy.”
James Vitali of the Policy Exchange think tank said that any announcements this week should “not undermine the Government’s efforts to grip inflation” and “ought to support younger working families first and foremost”.
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