Jeremy Hunt says tax cuts will have to wait until inflation is under control

The chancellor warned he would prioritize cutting inflation over tax cuts as he outlined how he planned to use Brexit, but unions warned his speech could signal further cuts to public services.

And they accused him of “ignoring a massive staffing crisis in schools, hospitals and nursing homes”.

Jeremy Hunt said “the best tax cut right now is to cut inflation,” offering a vision of outside investment London stimulate UK economic growth.

Halving inflation is one of the prime minister Risha Sunak’s top five priorities ahead of the next general election.

In a speech at Bloomberg’s London headquarters, Mr Hunt said that reducing inflation was “the only sustainable way to restore industrial harmony” in Britain as he suggested, the tax cuts will have to wait.

It comes amid public sector strikes over pay and predictions that Britain could be headed for recession if inflation hits 10% by some measures.

TUC general secretary Paul Novak said: “The chancellor is ignoring the massive staffing crisis affecting our schools, hospitals, care homes and other key services.

“Instead of addressing the fundamental issue of public sector pay – which is driving many key workers out of their professions – this was the elephant in the room.

“Civil servants will be deeply concerned by the Chancellor’s warnings of continued restraint. We know that’s usually code for shorthand.’

He said Mr Hunt and Mr Sunak were key to unlocking the current industrial dispute. “They need to give public services the funding they desperately need, starting with a fair pay rise this year for the staff who make them work.

“We cannot afford to repeat the mistakes of the 2010s, when years of underinvestment decimated frontline services and ultimately led to the staff attrition we are seeing today.”

The chancellor said: “My party understands better than anyone else the importance of low taxes in creating incentives and nurturing the animal spirits that drive economic growth.

“Another conservative understanding is that individuals and businesses can only take risks when the government provides economic and financial stability.

“So the best tax cut right now is to cut inflation.”

Mr Hunt also used his speech to outline a plan to see Brexit act as a “catalyst” for growth, while also announcing measures to boost prosperity beyond the South East of England and London.

The chancellor said he wanted to reverse what he described as “decline” in Britain, saying the country’s economy had “grown at about the same rate as Germany” since the 2016 referendum on the European Union.

He said Brexit should be seen as an opportunity to “create an economic environment that is more conducive to innovation and more growth-oriented”.

“Our growth plan is necessary, accelerated and made possible by Brexit,” he said.

“The desire to move to a high-wage, high-skill economy is shared by all sides of this debate.

“We need to make Brexit a catalyst for bold decisions that will use the agility and flexibility it makes possible.”

Mr Hunt, referring to the government’s so-called equalization programme, said the weakness of the economy was the “excessive concentration of wealth in the south-east”.

He said the increase was part of one of his so-called four “E” pillars on which he would judge growth policies: enterprise, education, employment and everywhere.

Unveiling proposals to promote regional economic prosperity, the Cabinet minister said the Treasury would identify locations for investment zones that could be turned into a “mini Canary Wharf”.

The regeneration of the docklands since the 1980s has led to the creation of a major financial center in East London.

Promising to provide “high-potential but underperforming areas” with “favorable tax treatment to attract new investment”, he said work on identifying locations would begin soon.

As part of his ’employment’ pillar, Mr Hunt urged those who left the workforce during the Covid pandemic to return, telling them: “Britain needs you”.

The sitting president at No 11 Downing Street said he would ensure the “conditions necessary to make work worth your while” are put in place to make a return to work an attractive proposition.

Unison general secretary Christina Makanea said: “Jeremy Hunt’s grandiose vision for the future completely ignores vital public services.

“The chancellor holds the key to unlocking the damaging health pay row and rebuilding the NHS, but he’s not even trying.

“Paying the right wage will stop staff attrition and means there is more money to spend on the local high street.”

Rachel Reeves, the shadow chancellor, said: “Thirteen years of Tory economic failure have left living standards and growth at record lows, wrecked our economy and pushed up mortgages and bills.

“The Tories have no plans for now and no plans for the future. It’s time for a Labor government that will build a better Britain.’

Liberal Democrat Treasury spokeswoman Sarah Olney said: “This Conservative Party sounds like an unfaithful partner asking for another chance.

“But after the collapse of the economy and the increase in mortgages, why should we trust them again?

“Jeremy Hunt’s speech is cold comfort for families and pensioners facing unsustainable price rises”.

Business groups responded warmly to this. Tony Danker, CEO of CBI, said: “It now has a strong foundation for growth. And we hope that the budget in less than two months will show decisive action to move us forward.”

Mike Childs of Friends Of The Earth said: “The only economy of the future is a green economy and now, with the exception of offshore wind, the UK is losing the race for investment.

“The chancellor has talked about the importance of education, but there is no agreed plan for clean jobs and skills to ensure we have workers for the industries of the future, from the automotive sector to forestry and home improvement.”