Former Chancellor Sir Jeremy Hunt has issued a warning to Rachel Reeves hours before the Budget and revealed what he is most worried his successor will announce later today.
The Conservative MP, who held the role under Liz Truss and Rishi Sunak from 2022 to 2024, also outlined his predictions for this year’s Budget including his thought on how much Reeves could increase taxes by.
Sir Jeremy made the comments last night at the London headquarters of investment platform Fundment.
On what he thinks will be announced in the Budget later, he said: “I suspect taxes will go up by £25bn and spending will be cut by about £5bn.
“I think income tax thresholds will be frozen for a couple more years and there will be extra council tax bands for more expensive houses, and probably some restrictions on salary sacrifice schemes.”
Former Chancellor reveals Budget ‘worry’
Sir Jeremy also talked about possible changes to council tax and what his message to Rachel Reeves would be.
He said: “The one that worries me the most is the extra bands on council tax – as things stand, there is the prospect of inflation falling in the next year which will mean interest rates can go down; that would be great for the economy if it fires up the housing market, but if you add in a whole bunch of bands, it is going to gum up the top end of the market and stop that housing market recovery, and I think that will mean economic growth takes longer to get back.
“What I would say to Rachel Reeves is you are responsible as Chancellor for 20 per cent of our economic output through the state, and yet public sector productivity since 1997 has been falling for an average of 0.3 per cent per year.
“Public sector productivity is the one thing under the direct control of the government, and I would focus on that.”