All you need to know about Hunt’s Budget statement tomorrow

Tomorrow, Jeremy Hunt will pitch his and Rishi Sunak’s long-anticipated economic vision for the country in a time of turmoil to the House of Commons. The Chancellor is expected to announce a series of tax rises and spending cuts in a bid to fill an estimated £60billion ‘black hole’ in the Treasury’s finances.The Autumn Statement will mark an abrupt about-turn by the new administration compared with Kwasi Kwarteng’s disastrously-received mini-budget a handful of months ago.The Prime Minister is believed to have devoted much of his first month of governing to the fiscal event, and is seeking to restore the Government’s economic credibility in the wake of the fallout from Liz Truss’s short-lived premiership.Reports have emerged in recent days that suggest few Governmental budgets and spending commitments will be immune to savings – though Mr Sunak’s administration has stressed it is not returning to austerity.The PM has said the cuts will be ‘fair’ and ‘compassionate’. But with inflation over 11 percent – largely driven by increased food and energy costs – many are likely to have a strong reaction to a higher tax bill while public services are cut and energy support schemes are reined in.What Mr Hunt will have on his side is an independent forecast by the Office for Budget Responsibility, published alongside his announcements – a lack of which in September spooked the gilt markets.READ MORE: ‘Tomorrow’s budget will hit struggling middle-income families hard’ Sunak is believed to have devoted much of his first month of governing to the fiscal event (Image: PA) Hunt will have an independent forecast by the Office for Budget Responsibility on his side (Image: PA)Britons will likely see the main effects of tomorrow’s budget through so-called ‘stealth taxes’ – policies that see taxpayers handing more over to the Treasury without raising rates.It is widely believed that Mr Hunt will freeze the income level at which workers begin paying a higher tax band, while lowering the highest tax threshold of 45 percent from £150,000 to £125,000 per annum. Put simply: inflation and pay increases, as a result, will mean more people automatically falling into higher tax categories.Plans are also reportedly being considered to hike the amount local authorities can raise council tax without having to hold a referendum, allowing councils to raise rates by five percent or more in a bid to pay for social care costs.It means that many of the households who received a council tax rebate as support for energy bills this year – a policy of Mr Sunak’s when he was Chancellor himself – will have to hand a large portion back to their local authority. Hunt is expected to make Government support for soaring energy bills less generous from April (Image: Express) Biden crushes hopes of US trade deal with UK At the same time, Mr Hunt is expected to make Government support for soaring energy bills less generous from April next year, with measures becoming aimed at the most vulnerable.Raising the windfall tax on fossil fuel giants who have profited healthily from the energy crisis from 25 to 35 percent may also be in store, as well as the introduction of a levy on electricity firms. Mr Sunak was recently taken to task by Sir Keir Starmer, the Labour leader, on how much oil and gas firms had paid in reality into the scheme.The cap on social care costs – announced by Boris Johnson – could also face a delay of at least two years to save the Treasury some cash, although campaigners have already flagged concerns about such a decision.Even the darkest cloud has a silver lining though, it seems. Mr Sunak has indicated that the triple lock on pensions – which ensures the state pension rises in line with inflation, average salary rises or 2.5 percent, whichever is highest – may be protected as pensioners were at the ‘forefront’ of his mind.So at least while families shiver and starve, pensioners might not. Tomorrow’s statement will mark an about-turn from Kwarteng’s disastrously-received mini-budget (Image: PA) Kwarteng’s fiscal event led to a mass sell-off of long-term Government bonds (Image: Express)While the Chancellor is looking to save £54billion, it has been reported that the Government is going to set aside billions of pounds to insulate homes and upgrade boilers in a bid to cut the UK’s energy demand.According to Bloomberg, Mr Hunt will reveal he wishes to cut energy consumption through wastage by at least 13 percent this decade. Since Putin’s invasion of Ukraine drove energy prices sky-high, energy efficiency experts have been calling for measures to lower consumption, thus lowering bills.How did we get here?There are many factors economists have pointed to that have led to the current economic turmoil: economic stagnation and increased borrowing throughout the pandemic; rising inflation globally as a result of it, along with supply chain issues; and the war in Ukraine. Clarke: ‘It’s very important that we do not throw the baby out with the bathwater and overcorrect’ (Image: PA)But Mr Kwarteng’s unfunded tax cuts announcement – which ultimately led to the demise of the shortest Government in living history – have not helped by knocking confidence in the Treasury. His fiscal event led to a mass sell-off of long-term Government bonds over fears it would not be able to afford to repay them.The Resolution Foundation calculates that the mini-budget made the Government’s financial shortfall £30billion bigger as a result, while Andrew Bailey, the Bank of England’s governor, said it caused a long-lasting ‘knock’ to the UK’s reputation as a safe investment.Economists behind what came to be known as Trussonomics have suggested it was not the tax cuts themselves that caused that turmoil – especially given that they would not have occurred until April next year – but that they were announced without an independent economic forecast.Some have argued that the mishandling of the mini-budget should not mean its fiscal direction was entirely reversed. Simon Clarke, who was in Liz Truss’s cabinet, said today: ‘I accept completely mistakes were made about how the budget was handled, both the timing and the radicalism as well as the lack of OBR forecast.’But the underlying contention that Liz was making remains important and valid, and I think it’s very important that we do not throw the baby out with the bathwater and overcorrect in the months ahead.’