The chancellor will insist to MPs on Thursday that his autumn statement puts the UK on a “balanced path to stability” as it tackles the “enemy” of inflation, which has soared to a 41-year high. But the measures could put him on a collision course with Tory MPs on the right of his party, who are already expressing anger at the prospect of some of the plans. Dominic Raab says tomato-throwing incident ‘never happened’ – latest politics An 11th hour petition by two dozen Tory MPs, led by Jonathan Gullis, has been sent to the chancellor asking him not to raise fuel tax in the statement. The package will take the form of £30bn of spending cuts and £24bn of tax rises over the next five years – in stark contrast to Kwasi Kwarteng’s unfunded spending cut two months ago. Among the measures, annual energy bills for a typical household will remain capped at £2,500, but this will rise to £3,000 in April 2023, when support will become more targeted with additional payments for low-income households and pensioners, the policy Sky editor Beth. Rigby understands. When it comes to tax increases, those with the broadest shoulders will bear most of the burden, but there will be pain everywhere. The chancellor is expected to lower the threshold for paying the highest rate of tax to £125,000 – down from £150,000 already. This is a marked difference from Liz Truss’ plans to scrap the 45p rate altogether, giving the highest earners an average tax cut of £10,000. The analysis says that reducing the cap would bring an extra 246,000 people into the highest bracket at a cost of around £580 each a year, which would in turn raise the Treasury by £1.3bn a year. Mr Hunt is also expected to announce a freeze on personal income tax and national insurance tax caps to last until 2028. Sometimes referred to as the “stealth tax,” the freeze on tax brackets lures more earners into paying higher tax rates. Mr Hunt has already hinted that he will make it easier for local authorities to raise council tax, with reports suggesting the threshold for raising bills without a referendum could rise from 2.99% to 5%. Also expected is a large windfall tax increase for energy companies and a new tax on power generation. Labor has previously said a windfall tax extension could raise an extra £50bn and has criticized what it calls a “loophole” which allows oil and gas companies to offset their tax liability if they invest back in the UK. In terms of spending cuts, departments are expected to be updated to live within an envelope of the March Spending Review, when inflation was 3%. With inflation now at 11.1%, which equates to a decline in real terms, that means hard choices will be needed. However, there will be some exceptions, with the NHS expected to get more money. There is also likely to be some protection for the schools budget, Sky deputy political editor Sam Coates understands. “There will inevitably be some good news after weeks of dire warnings,” he said. Mr Sunak and Hunt spent weeks warning that tough choices remained. But the prime minister told Sky News on Tuesday that “fairness and compassion” would be at the heart of his decisions. Use Chrome browser for more accessible video player 6:40 Rishi Sunak refuses to apologize for the economic turmoil Liz Truss’ short-lived government caused in the UK It is understood the chancellor will keep the triple lock on pensioners in his autumn statement – honoring a manifesto commitment. It is also expected to upgrade benefits in line with inflation, rather than earnings (a controversial move that would have saved £5bn). The government has not confirmed what measures the declaration will include, but there is a steady stream of measures reportedly under consideration. This “pitch rolling” helps markets get an idea of what’s coming down the road and avoids spooking traders. When Ms Truss and Mr Kwarteng made several surprise announcements in their mini-budget in September, it contributed to the financial chaos that led to the collapse of the pound and the Bank of England having to step in to prevent pension funds collapsing. Read more: How could Prime Minister Rishi Sunak and Chancellor Jeremy Hunt reduce the ‘economic black hole’? Analysis released on Monday by independent think tank the Resolution Foundation found that the mistakes they made cost the UK £30 billion, double the amount the Treasury says it should raise. Mr Hunt will say his “difficult decisions” are necessary to keep mortgage rates low and tackle soaring energy and food prices that are exacerbating the cost of living crisis. “Families across Britain make sacrifices every day to live within their means, and so do governments, because the UK will always pay its way,” he is expected to say. But Tories on the right of the Conservative Party are already expressing anger at the prospect of higher taxes. Among Tory critics, former cabinet minister Esther McVey has warned she will not support tax rises without scrapping the “redundant vanity project” of HS2. Former business secretary Jacob Rees-Mogg told ITV’s Peston he would vote for the budget to keep the government from falling, but warned he opposed tax rises, which he believes “risk making the recession worse”. Labor has also warned that Britain is “falling behind on the world stage”. Shadow chancellor Rachel Reeves said: “The country is being held back by 12 years of Tory economic failure and lost opportunities and workers are paying the price. “What Britain needs in the Autumn Statement is fairer options for workers and a proper growth plan.” And Sharon Graham, general secretary of the Unite union, warned Mr Hunt “workers are ready to take a stand”. “It can choose to invest in the NHS and achieve fair pay – or it can leave it as it is today, at risk of fatal collapse,” he said.
