Jeremy Hunt plans to cut tax by reforming Britain's public sector

Jeremy Hunt sets out road map to cut tax by reforming Britain’s sluggish public sector as the Chancellor looks to put the country ‘on a sustainable path to lower taxes’

• Hunt said public sector output is still 5.7 per cent lower than pre-pandemic
• Treasury chief secretary John Glen will now lead a major productivity review 

Jeremy Hunt today set out plans to cut tax by reforming Britain’s sluggish public sector.

The Chancellor said improving its output was the key to boosting growth and putting the UK ‘on a sustainable path to lower taxes’, as he unveiling proposals for a major productivity review.

The Daily Mail revealed at the weekend that Mr Hunt has warned ministers that public sector reform is now the key to cutting Britain’s record tax burden.

In a speech to Margaret Thatcher’s favourite think-tank, Mr Hunt acknowledged that output was starting from ‘a low base’. He said that while private sector output is now 1.3 per cent higher than before the pandemic, the public sector equivalent is still 5.7 per cent lower than in 2019.

‘What does that tell you? Our innovators, job creators, entrepreneurs and risk-takers have bounced back but the public sector is still feelings the effects of a once-in-a lifetime pandemic,’ he said.

Jeremy Hunt (pictured on Monday) today set out plans to cut tax by reforming Britain’s sluggish public sector

‘But now, with the pandemic behind us, we need a renewed focus on public sector reform.’

His comments come amid growing Tory pressure to cut taxes. In a pointed intervention at the same event, the Commons leader Penny Mordaunt said the Conservatives should be ‘unapologetic about talking about building more and taxing less’.

Tory grandee Sir John Redwood urged the Government this week to heed Boris Johnson’s warning that taxes are too high. He called for immediate action to help win back voters in three crunch by-elections triggered by the former Prime Minister’s shock resignation last week.

‘We need tax cuts,’ Sir John said. ‘The PM needs to take action now, this day, to show those by-election voters we mean business.’

In his speech to the Centre for Policy Studies tonight, Mr Hunt said slow growth, coupled with an ageing population meant that pressure on taxes was on an unsustainable path. He said forecasts by the Office for Budget Responsibility suggested that long-term growth was now just 1.6 per cent, while public spending was on track to grow by 2 per cent a year.

‘You don’t need brilliant Treasury analysts to tell you the consequence of a state growing faster than the economy: higher borrowing, higher taxes or a combination of the two,’ he said.

Mr Hunt warned that without action to boost growth, the OBR believed that Britain’s debt mountain would double in size over the next 50 years. ‘That would mean increasing annual tax revenues by £200billion… or at least doubling the basic rate of income tax and main rate of employee National Insurance.

‘I reject that prospect, as does every Conservative, because that is the path to socialism – less freedom, less enterprise and less prosperity.’

Sir John Redwood said PM Rishi Sunak (pictured) ‘needs to take action now’

He said the Treasury chief secretary John Glen would now lead a major productivity review designed to boost output in public services.

A rise in productivity growth of just 0.5 per cent could end the growth in the size of the state, while a further 0.5 per cent could clear the way for significant tax cuts.

Mr Glen is expected to look at the potential for new IT systems, more use of artificial intelligence and a greater embrace of innovation by the public sector.

The review, due to report by the Autumn Statement, will look at ‘what it would take to deliver the extra 0.5 per cent’.

Source: Read Full Article