The chancellor is likely to use the autumn statement to say the need to save money and reduce government borrowing will require the household energy price cap to rise from £2,500 to an expected £3,000 to £3,100. Hunt will also announce higher windfall taxes on oil, gas and power companies that have seen their profits soar after Russia’s invasion of Ukraine in February sent global energy prices skyrocketing. Despite the economy’s fragile state, the chancellor will say he needs to pump up to £60bn out of the economy through tax rises and spending cuts to help the Bank of England curb inflation. There are expected to be rises in capital gains tax and dividend tax, while personal tax thresholds are also likely to be frozen for two more years from 2025-26. Council tax could also rise as the rule limiting councils to 3% increases, unless they hold a referendum, it could rise to 5%. The latest official cost of living data showed the annual rate of inflation jumped to a 41-year high of 11.1% last month, largely due to a 90% rise in domestic energy bills. The Office for National Statistics said that without the government support scheme the annual rate would be close to 14%. Hunt and the prime minister, Rishi Sunak, have insisted tackling the cost-of-living crisis is their top priority, although senior Labor figures and many economists believe inflation has now peaked and will ease next year. Many of the measures are expected to take effect in 2024 or later, when the Treasury believes the economy will be better able to withstand the squeeze. Sunak was initially hostile to Labour’s demand for a windfall tax when he was chancellor, but eventually bowed to pressure to introduce a tax in May. Hunt will impose an even tougher levy on a wider range of energy companies. Oil and gas companies will see the windfall tax increase from 25% to 35%, with an extension for another two years until 2028. Companies that generate electricity from older wind and solar farms, as well as older nuclear plants, will likely face an additional profit tax of 40% to 45%. A government source said “the whole approach is to reduce inflation”, with Hunt warning that persistently high inflation was causing industrial unrest, expensive food and fuel, business failure and job losses. “If we go into recession it will be driven by inflation and today it reached 11.1%. This hinders any prospect of economic growth. Until we tackle inflation, we will not be able to have long-term sustainable growth. Borrowing for tax breaks would only add fuel to the fire. We are putting together a plan to bring the debt down in the medium term and balance the books,” the source added. Speaking ahead of the autumn statement, Mr Hunt said his priority would be to see that those with the broadest shoulders shoulder the biggest burden and promised to be “honest about the challenges and fair in our solutions”. Amid a cost-of-living crisis, Hunt is expected to protect the triple lock on pensions and upgrade benefits in line with inflation. There will also be additional energy bill support for vulnerable people such as pensioners and benefits. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. However, he will warn that stability “depends on making difficult decisions now”. The statement is likely to outline public spending cuts of between £25bn and £30bn, including cuts in capital spending such as savings on major infrastructure spending such as high-speed rail. However, the NHS is expected to receive a budget increase, with trust leaders having called for extra funding to keep up with inflation, around £7bn. “We’re making tough decisions to deliver strong public finances and help keep mortgage rates low, but our plan also protects our long-term economic growth,” Hunt said ahead of the statement. “At the same time, we protect the vulnerable, because to be British is to be compassionate. “There is a global energy crisis, a global inflation crisis and a global financial crisis. But the British people are tough, inventive and resourceful. We have faced bigger challenges in the past. “We are not immune to these global headwinds, but with this plan for stability, growth and public services, we will weather the storm.” Hunt will try to portray the UK’s economic woes as a global problem, exposing the disastrous mini-budget of his predecessor, Kwasi Kwarteng, and former prime minister, Liz Truss, which sent markets into turmoil, driving up interest rates and borrowing costs of the goverment. Unlike Kwarteng’s package, the autumn statement will be accompanied by a full analysis by the independent Office for Budget Responsibility. The OBR will cut its growth forecast for the UK but will say Hunt’s measures should be enough for the government to meet its rule of having debt as a share of national income fall within five years. Labour’s shadow chancellor Rachel Reeves said the UK was “held back by 12 years of Tory economic failure and missed opportunities”. “Britain has so much potential but we are lagging behind on the world stage, while mortgages, food and energy costs are going up and up,” he said. “What Britain needs in the Autumn Statement is fairer options for workers and a proper growth plan. “That’s why Labor has a long-term plan to get our economy back on track, fueled by the talent and effort of millions of workers and thousands of businesses. It will be fairer, greener and more dynamic.” At the weekend, he accused Hunt of choosing to tax workers while doing “little to close the tax loopholes that mean some of the wealthiest don’t pay their fair share”.
