Jeremy Hunt claimed ‘fiscal discipline’ is working today amid hopes that figures will finally show inflation slipping below 5 per cent tomorrow.
The Chancellor told MPs that ‘continued progress’ on curbing increases in prices was down to government’s ‘hard work’ to bear down on borrowing.
The comments came with analysts predicting that official statistics will show the headline CPI rate at 4.8 per cent.
The potential boost comes a week before Mr Hunt delivers the crucial Autumn Statement, and with MPs increasingly optimistic he might move to reduce the tax burden.
Treasury sources have stressed that the package will not include anything that fuels inflation, and must be ‘affordable’.
Analysts are predicting that official statistics tomorrow will show the headline CPI rate at 4.8 per cent
Chancellor Jeremy Hunt told Cabinet that ‘continued progress’ on curbing increases in prices was down to government’s ‘hard work’ to bear down on borrowing
Any wriggle room is likely to be used on business taxes first, but cutting inheritance tax or stamp duty has not been completely ruled out.
Quizzed in the Commons, Mr Hunt said he was determined to ‘win the battle’ against inflation.
He faced Conservative calls to lower taxes and scrap the so-called ‘factory tax’, which relates to the inability to fully expense investments in machinery and buildings.
Mr Hunt used the Budget in March to announce a three-year policy of ‘full expensing’ to ensure every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profit.
He was urged to make this a permanent change, with the Chancellor noting this would be a £10 billion commitment if implemented.
Speaking on day five of the King’s Speech debate, Mr Hunt told the Commons: ‘As we start to win the battle against inflation, we can focus on the next stage which is growth. So next week we will see an autumn statement for growth.
‘Because no business can expand without hiring additional staff, I will address labour supply issues to help fill the nearly one million vacancies we have, working with the excellent Secretary of State for Work and Pensions.
‘This will build on the 30 hours of free childcare offer that I announced for all eligible children over nine months in the Spring Budget.
‘I will also focus on increasing business investment because, despite the fact that our growth has been faster than many of our European neighbours, our productivity is still lower.’
A readout of the newly-reshuffled Cabinet’s meeting said: ‘Ahead of new inflation statistics to be released tomorrow, the Chancellor said the continued progress in reducing the rate of inflation was testament to the hard work of Government in retaining fiscal discipline, not fuelling inflation through additional borrowing.
‘The Prime Minister concluded by saying it was a shared privilege to be a member of Cabinet and that he was confident that the people around the table had the energy and ambition to deliver real change to benefit the public.’
Although ministers used to get advance sight of inflation figures, that arrangement was ditched some years ago due to concerns about leaks.
There were more signs the squeeze on Brits might finally be easing today as figures showed wages outstripping inflation at the fastest pace for two years.
Regular pay was up 7.7 per cent in the three months to September, slightly lower than the record high of 7.9 per cent in the previous period.
However, with CPI inflation cooling that meant a 1 per cent increase in real terms – the highest since September 2021.
Annual average regular pay growth for the public sector was 7.3 per cent, a level unmatched since comparable records began in 2001.
There was also encouraging evidence that the jobs market is holding up, with unemployment unchanged at 4.2 per cent in the third quarter.
Vacancies were down 58,000 quarter-on-quarter at 957,000, but remain at a historically high level.
The finding that wages are slowing down in cash terms could help convince the Bank of England that the threat from inflation is receding, and it can dodge more hikes to interest rates.
Regular pay was up 7.7 per cent in the three months to September, slightly lower than the record high of 7.9 per cent in the previous period. However, with CPI inflation cooling that meant a 1 per cent increase in real terms – the highest since September 2021.