'Britain must face into the storm': Hunt to reveal new taxes and help as he patches £50bn black hole
16 November 2022, 19:47 | Updated: 17 November 2022, 08:27
Millions more paying a higher rate of tax, a council tax hike and a new raid on high earners are all under consideration ahead of Thursday’s budget.
Listen to this article
Loading audio...
Jeremy Hunt, who is eyeing up a way of fixing a roughly £50bn black hole in the nation's finances, is also mulling over raising benefits with inflation and putting up the national living wage as he warns Britain must "face into the storm".
Fresh windfall taxes on energy giants are also under consideration by the chancellor.
It could add up to about £25bn of tax rises and £35bn of spending cuts.
"We are taking a balanced path to stability, tackling the inflation that eats away at a pensioner's savings and increases the cost of mortgages to families, at the same time supporting the economy to recover," Mr Hunt is expected to say.
"But it depends on taking difficult decisions now.
"We aren't immune to global headwinds, but with this plan for stability, growth and public services we will face into the storm."
He has already warned everyone can expect to hand more money to the tax man but stressed help is on the way – and he is also due to set out his cost of living plan and confirm the pension triple lock will stay in place.
Speaking at the G20 summit in Indonesia, Rishi Sunak did not give away any specifics before Mr Hunt announces his new plans to MPs.
The Prime Minister said: "With more news of inflation today, it's the number one thing that's on people's minds, it's the thing that's causing most anxiety.
"That's what's eating into people's living standards. It's the enemy that we need to face down. And I want to make sure that we do that and we do it as quickly as possible."
He went on: "I want to tell people that the decisions that we'll be making tomorrow will be based on fairness.
"They'll be based on compassion and I am confident that when people see the set of decisions... they will see that we have strived incredibly hard to deliver fairness to deliver compassion, and put the UK on a positive economic trajectory."
Speculation that Mr Sunak and Mr Hunt are planning "stealth" taxes has mounted.
It is thought Mr Hunt is considering extending the freeze on income tax thresholds until 2028, which would drag millions more into paying a higher rate as their salaries rise.
The existing freeze was meant to end in 2026, and pushing it back a further two years could leave anyone earning more than £50,000 paying £3,659 more.
A council tax rise is also being weighed up, it is believed.
Councils can only raise it by 2.99% with another 1% social care levy added on unless they call a public vote on hiking it by more.
It is thought Mr Hunt is considering extending that to 5% to help local authorities pay for services.
The Chancellor has said the new budget would need the better-off to pay more, and changes to the top rate of income tax could be on the way – despite Liz Truss attempting to abolish it in the disastrous mini-budget merely weeks ago.
Read more: Rishi Sunak refuses to apologise for Liz Truss' budget turmoil
Reports suggest the £150,000 starting point for the 45% tax could be lowered, or that bracket could be taxed at a higher percentage.
A new windfall tax on energy businesses making huge profits is also under being mooted.
Mr Hunt has pledged the budget would not be all doom and gloom, however.
New payments to help with the cost of living are expected, with those most at risk of inflation and eye-watering energy bills set for £1,100.
People on benefits will be in line for £650, worse-off pensioners will get £300 and another disability payment of £150 is also set to be confirmed.
Benefits could be hiked in line with inflation from next April, and the triple lock, which ties pension increases to earnings, the consumer price index or 2.5% - whichever is highest - is due to be confirmed.
Some observers have wondered if Mr Hunt would have gone for a lighter lock to decrease the amount of spending on pensions, a politically risky move given the propensity for the elderly to vote, and cast their votes for the Tories.
