Jeremy Hunt STILL won’t cut taxes next month despite surprise £30billion government windfall

Chancellor of the Exchequer Jeremy Hunt at a meeting of senior leaders from across UK green industries at Queen Elizabeth Olympic Park, east London, to discuss how the sector can deliver long-term growth and achieve climate and environmental objectives. Picture date: Tuesday February 21, 2023. PA Photo. Photo credit should read: Stefan Rousseau/PA Wire

JEREMY Hunt was today handed a £31BILLION pre-Budget windfall after duff forecasts were proved wrong by soaring tax takes.

The better-than-expected finances heaped pressure on the Chancellor to cut taxes next month – and freeze fuel duty for hard-pressed drivers.

Jeremy Hunt is resisting pressure to cut taxes at next month’s Budget

In January alone the Treasury enjoyed a surprise £5.4billion surplus thanks to the highest tax haul since records began in 1999.

Ballooning tax receipts means public borrowing was £30.6billion less than projected by the gloomy Office for Budget Responsibility. 

But Mr Hunt has rejected pleas to slash the £368.5billion annual tax burden saddling Brits.

The Chancellor suggested he would bank the extra cash to pay off the country’s mammoth debts at their highest since the 1960s.

He said “it is vital we stick to our plan to reduce debt over the medium-term”.

Downing Street also poured water on tax cuts and stressed that “significant uncertainty and volatility” in the economy persists.

Rishi Sunak has vowed to halve inflation by the end of the year as well as reining in borrowing and driving growth.

January is traditionally a good month for public coffers as companies settle their bills before tax deadlines at the end of this month. 

Still, the government still had to pay a record £6.7 billion of interest debt payments on the back of higher rates and pricier bonds.

But ex-Cabinet Minister Sir John Redwood said Britain must cut taxes on business to boost competitiveness.

The Tory MP said: “The UK Treasury needs to worry its 25 per cent planned corporation tax rate may collect a lot less revenue than they think. Businesses are taking investment elsewhere.”

And the Institute for Economic Affairs warned the country was in a “doom loop” of higher taxes and a flatlining economy.

Economist Julian Jessop said: “If the Treasury takes the OBR’s grim forecast for economic growth as gospel and refuses to cut taxes, the doom loop will continue.”

Keep It Down campaigners also hope the extra headroom will let Mr Hunt stop fuel duty surging 23 per cent by freezing the levy and extending the 5p cut, which would cost £6billion.

Yet he came under further pressure from striking unions to boost pay, with the TUC demanding: “No more excuses. Provide a fair pay settlement to our public sector workers.”

In further good news for the economy companies posted an unexpected sharp rebound in activity.

A closely watched survey the purchasing managers’ index PMIs – found business activity scored well above expectations.

The mood among businesses was boosted by “signs of inflation peaking, supply chains improving and recession risks easing”. 

Pantheon Macroeconomics said that businesses were “relieved that the economic outlook is not quite as bad as seemed likely at the end of last year.”

At an event in East London Mr Hunt also resisted calls to use the £30billion windfall to scrap energy price rises.

He said: “Unfortunately, we don’t have that windfall.

“And the reason is, well, of course the fall in energy prices, means the numbers are different to what they were two months ago, but unfortunately, even though the cost of the EPG has gone down, so too have the windfall taxes that we were expecting to collect, to pay for them.

“So the net difference is marginal, but the most important thing is this was a one off one year cost only to make the permanent changes in tax and spending that are recurring year in year out.

“You need a more fundamental change in national finances, which I’m afraid we haven’t seen right now.”

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