Hunt says huge tax rises show government is not 'deferring horrible decision' until after election

The chancellor said he is confronting the economic challenges facing the UK 'head on'

Jeremy Hunt has said that announcing huge tax rises in his Autumn Budget shows that he is not "deferring a horrible decision", despite putting off spending cuts until after the next general election.

The chancellor told ITV's Peston that his financial plans confront the economic challenges the UK faces "head on" and made the recession - which the UK has now officially entered - "shallower" than it would have been otherwise.

"Well I think that a Conservative Chancellor who stands up in the Commons and announces £25 billion of tax rises, I don't think anyone would say that is deferring a horrible decision," he said.

"That is confronting this problem head on and what support we can give to the economy in the next two years, of course we do while we're going through a recession.

"But in the end what the country wants, what families want, is the confidence that comes from honesty about the problems but also having a plan in place that gives them hope for the future that we can get through this, as we absolutely can."

Mr Hunt said his budget would “ask more from those who have more” as he announced the 45p income rate tax threshold will fall from £150,000 to £125,140. However, different rates apply in Scotland.

This means those earning £150,000 or more will pay just over £1,200 more a year, with the Treasury estimating that an extra 232,000 people will be paying the top rate of income tax from April.

Public spending, meanwhile, will face a squeeze under Mr Hunt’s Autumn Budget but most of the pressures may not be fully felt until after 2025.

It means that the Conservatives could be out of office by the time spending cuts are scheduled to take full effect, with the next election required to take place before January 2025.

Details of where the cuts and efficiencies will fall in the coming years are as yet unclear, with the government committing to the current spending review, due to expire in 2024/25.

Overall, the Office for Budget Responsibility's (OBR) analysis paints a gloomy economic outlook, as household disposable income is forecast to drop by more than 7% over the next two years, the biggest fall since records began.

This cumulative fall is large enough to wipe out the past eight years of growth and would see disposable income back to the level it was in 2013/14, says the OBR.

It added the economy will shrink even further by 2% next year due to sky-high inflation, while government debt is set to balloon £400 billion higher than previously expected.

Mr Hunt has said that global factors, chiefly Russia's invasion of Ukraine, which has caused energy and food costs to skyrocket, are driving the economic downturn.

Asked by ITV News Political Editor Robert Peston about the scale of the projected drop in living standards, Mr Hunt said: "Well these are challenges that are facing countries all over the world, and I think if you look at what the OBR said, they said we reduce the impact of that fall in living standards by half next year and overall by a quarter.

"Governments can't do everything but we've done a lot and the overall impact of these changes that we're making is that the recession that we now appear to be in is shallower than it would have been."

Asked about a warning from the OBR that the UK’s finances would remain vulnerable even after spending cuts and tax rises, Mr Hunt added: "Well that is correct, and that is because Vladimir Putin is trying to blackmail us and all the other countries in Europe and around the world by what he is doing in Ukraine, which is forcing up international energy prices."

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