Jeremy Hunt has given his strongest hint yet that he's leaning towards announcing tax cuts while also reducing benefits by billions of pounds.
Ahead of Wednesday’s financial announcement, the chancellor said that now is a “turning point for the economy” and that “this is the moment” to go for growth.
But he added there is also a need to “reform our welfare system” and the “priority” for the autumn statement is helping businesses.
Ministers usually use the September inflation figure to determine the increase in working-age benefits, which would result in a 6.7% rise.
However, Hunt has not dismissed the possibility of using October's significantly lower figure of 4.6%, which according to economists could save around £3 billion in spending.
Hunt declined to comment on taxes on Saturday but said he would “not do anything to jeopardise” the battle against inflation, after the prime minister’s target of halving it this year was hit.
Government denies it's punishing the poor amid tax cut talk (Evening Standard)
Inheritance tax slashed
It has long been rumoured that Hunt will cut inheritance tax.
This move would be popular with the Tory right as Rishi Sunak comes under growing pressure from that wing of his party, but would only directly benefit a small proportion of the public.
The options for cutting inheritance tax – which is charged at 40% on estates of more than £325,000, with an extra £175,000 towards a main residence passed to direct descendants – include reducing it by 50%, 30% or 20%, according to The Times.
The Tories are said to then be considering abolishing it entirely as an election manifesto pledge next year, which could cost £7bn a year in the short term.
However, the Institute for Fiscal Studies forecast that the amount the tax raises could increase to more than £15bn by 2033.
Watch: Jeremy Hunt considers major benefits squeeze to help slash inheritance tax
The chancellor has yet to rule out the possibility of using the much lower figure for inflation to raise benefits by.
Economists say the cuts would largely impact working-age households receiving disability or means-tested benefits, according to the Institute for Fiscal Studies.
Free prescriptions and legal aid may also be cut off for benefit claimants who are deemed fit to work and do not seek employment.
Asked about the possible changes in an interview with the BBC, Hunt said: “We will always be a compassionate Conservative government but part of how we make our economy successful is by making sure companies can find the staff they need.
“Nearly a million vacancies across the economy, so we do need to reform our welfare system.”
The Disability Rights UK charity said the “ongoing rhetoric” about benefits is “becoming relentless and in an era of rising disability hate crime, unhelpful”.
The government could extend its mortgage guarantee scheme for first-time buyers for another year past December 2023.
The scheme involves the government backing lenders who offer 95% mortgages, allowing homebuyers to pay a deposit of 5% of the value of the home.
A first home has slightly decreased in price over the 12 months to August 2023, mortgage lender Halifax reported.
It added despite this, in some regions, it can still cost up to ten times the average wage to purchase a home.
The government is reportedly considering reforming the individual savings accounts (ISAs) scheme which provides a tax-sheltered savings scheme for Britons.
Currently, 60% of ISA accounts are in cash, but the government may raise the annual ISA limit (£20,000) for UK company investments to encourage more share ownership.
The returns from money held within them are tax-free, and the Treasury is considering changing the rules around them in the autumn statement and then looking at wider-reaching reforms.
At the moment, savers are limited to opening and paying into just one type of ISA per tax year.
The government plans to scrap this rule, and customers will be allowed to open an unlimited amount of ISAs and still keep their tax-free allowance, according to the Telegraph.