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22 November 2023

Jeremy Hunt’s Autumn Statement was delivered from an alternate reality

The Chancellor’s jolly demeanour betrayed his failure to comprehend the living standards crisis.

By Freddie Hayward

“I come today with good news,” Jeremy Hunt declared at the beginning of his Autumn Statement from the despatch box. It was his wife’s birthday, he explained. A strange introduction to a fiscal event that would reveal the sclerosis at the heart of the British economy. But then again, Hunt did not intend to talk about any of that. Things are going great, he said. Like a faux messiah, his gospel did not accord with reality.

Hunt was despatched a year ago to stave off financial crisis after Liz Truss’s mini-Budget. Now he was back to mark his own homework. His mantra was that the hard work of inflation reduction had been done and he could now dish out some of the rewards. This was a message of fiscal discipline: not spending money that isn’t there. Hunt told the House that the government has reduced debt, or, to be more specific, the government was “delivering on reducing debt”. In reality, the government can only hit its debt reduction target because real-terms cuts to public spending are pencilled in for after the next election.

It’s not just the state that is experiencing a squeeze. Hunt’s jolly demeanour betrayed his failure to comprehend the financial difficulty people are in around the country. The Office for Budget Responsibility (OBR) report published alongside the Autumn Statement stated that the country still faces the biggest reduction in real living standards since the 1950s. 

But Hunt is cutting National Insurance by 2 percentage points, isn’t he? Let’s put to one side for a minute that he (and Rishi Sunak) wanted to raise National Insurance after the pandemic to fund the NHS. This was clearly an awful idea and whoever proposed it doesn’t understand the importance of low taxes for growth because Hunt said today that low taxes were essential to growth.

Indeed, he was proud to announce that he had 110 measures for growth in the Autumn Statement. It’s strange then that, having considered all of those measures, the OBR still thinks that growth will be lower over the next five years than it forecast in March. Perhaps the “concierge service” Hunt announced for wealthy foreign investors will fundamentally change the economic outlook?

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The truth is that this was an Autumn Statement designed to give the Conservatives some chance of reversing their terrible poll figures. The National Insurance cut will take effect from January, giving voters time to notice the difference in their pay cheques before the next election. But the fact £104bn of cost-of-living support so far has not improved matters means it is unlikely that a tax cut will change people’s minds – not least when polling suggests voters believe taxes will be higher under the Tories than Labour. On top of this, the overall tax burden is still reaching its highest level in 70 years (37.7 per cent of GDP). Giving with one hand and taking more away with the other will not result in happier, wealthier voters.

As well as skewering Labour, Hunt wanted to endear himself to his own MPs. He spent much of his speech going around the chamber thanking Tory MPs for successfully lobbying him on various policies. It did not scream: “national strategy in the national interest”. And there’s the rub. This Autumn Statement is another example of the Conservative Party reinventing itself ahead of an election. Hunt might think this is good news for the Tory party. But there was little good news for the country.

[See also: Jeremy Hunt’s Autumn Statement is about putting pressure on Labour]

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