Autumn Statement: Hunt does not rule out income tax cuts

Watch: Jeremy Hunt says he will not take any risks on tax cuts

Chancellor Jeremy Hunt has not ruled out cutting income tax in Wednesday's Autumn Statement, as he insisted economic growth was his priority.

Mr Hunt is finalising the government's spending plans as he seeks to revive a stagnant British economy.

The chancellor is believed to be considering reducing taxes on income or national insurance.

He told the BBC's Sunday with Laura Kuenssberg programme his speech would focus on removing barriers to growth.

The chancellor was traditionally coy when it came to confirming any of the actual financial decisions he will make before Wednesday.

Mr Hunt said he wanted to put the UK on "the path to lower taxes" but would "only do so in a responsible way" that did not "sacrifice the progress on inflation".

When asked if he would cut income tax, he said he would not comment on a decision ahead of the statement, adding: "Our priority is growth."

Tax levels in the UK are at their highest since records began 70 years ago and are unlikely to come down soon, according to a leading think tank, the Institute for Fiscal Studies.

Ahead of the Autumn Statement, Tory MPs on the right of the Conservative Party, including former Prime Minister Liz Truss, have been urging the chancellor to announce tax cuts.

Mr Hunt has previously said tax cuts are "virtually impossible" given the state of the economy and stressed bringing down living costs was his priority.

Appearing on Sunday with Laura Kuenssberg, the Conservative mayor of the West Midlands Andy Street said he would prefer taxes on businesses to be reduced than cutting inheritance tax.

While the chancellor had considered cutting inheritance tax, sources said the focus of the Autumn Statement would be to promote growth - on which inheritance tax has minimal impact.

Mr Hunt is likely to return to the issue for his Budget in the spring. He is also thought to have ruled out increasing tax thresholds as a way to cut taxes.

Instead, Mr Hunt appears to be weighing up direct cuts to income tax or national insurance.

Speaking on Sunday with Laura Kuenssberg, Mr Hunt remarked that "if you believe the papers there won't be any taxes left".

The chancellor and Prime Minister Rishi Sunak are hoping the Autumn Statement will turn the political tide in their favour after a bruising few weeks.

Last week Mr Sunak sacked Suella Braverman as home secretary and the Supreme Court ruled his plan to send some asylum seekers to Rwanda was unlawful.

But there was some good news for the prime minister, as UK inflation fell sharply in October to its lowest rate in two years, largely because of lower energy prices.

The government says it has met its pledge of halving inflation by the end of the year, but there is a limit to how much credit ministers can take as energy prices fall.

The Bank of England says raising interest rates, which it controls independently, is the best way to make sure inflation comes down.

Mr Hunt said the UK was "not out of the woods yet", but added he felt "there's too much negativity about the British economy".

The chancellor will base his spending plans on the latest economic forecast from the Office of Budget Responsibility (OBR), which assesses the health of the UK's finances and is independent of the government.

As inflation slows, economists have estimated the chancellor could have more than £10bn to spend on tax cuts.

Mr Hunt said tax cuts were not his only tool: "We need to be growing faster and that's why we're going to be taking a lot of measures."

One policy that has already been announced is a plan to reduce the time to approve and build pylons, overhead cables and other electricity infrastructure.

Under the plans, households living closest to new pylons and electricity substations could receive up to £1,000 a year off their energy bills for a decade.

What was clear was the extent to which Mr Hunt will try to use Wednesday to mark a new era - one in which the worst pressures of inflation have passed and the focus is on getting the economy to grow, instead of bumping along the bottom.

The tough task is how a message that things have improved translates into the real world when so many people are finding it hard to pay the bills.

When questioned about possible changes to benefits, Mr Hunt again refused to be drawn on the detail but said in principle, the Conservatives "don't believe in parking people in welfare".

This week, the BBC reported that ministers have drawn up large benefit changes for people who are unable to work due to health conditions.

Plans were unveiled which would mean people on Universal Credit allowance would have their claims closed if they fail to take steps to find work over six months. The government says it will encourage people back into employment.

Watch: Rachel Reeves says Labour would increase benefits in line with September inflation

Labour shadow chancellor Rachel Reeves criticised the government's plans for welfare, saying the number of people out of work is "on them" after 13 years in power.

Ms Reeves said: "The reason we've got so many people out of work is because our NHS is not functioning properly."

She said people's "lives are on hold" because they are waiting for the treatments that would allow them to get back to work.

The shadow chancellor was also asked about reports the government could subtly change how it sets the rate benefits increase for the next financial year to save billions for the Treasury.

Traditionally, the September inflation rate is used, which this year was 6.7% - but the government could instead base the increase on October's lower rate of 4.6% in order to save money.

Ms Reeves said: "In government I will use the inflation rate that is traditionally used to uprate benefits. I think that's the right thing to do."