Hunt 'would like to' cut taxes before general election if it can be done 'responsibly'

Experts say food prices were the main reason for the fall - with prices rising less than they were a year ago, ITV News Consumer Editor Chris Choi and Economics Editor Joel Hills report

Chancellor Jeremy Hunt said he "would like to" cut taxes before a possible October general election if he can do it in a "responsible way".

Questioned by ITV News Business and Economics Editor Joel Hills on Wednesday over whether he will try to cut taxes before the next election, Mr Hunt said he "wants to bring down the tax burden" despite calls to prioritise funding for public services.

He described it as a "central divide in British politics" and added: "A Labour Party that is basically happy with the tax burden as it is, and a Conservative party that says no, if we want to be competitive and successful, we need to bring down taxes."

"But I would only do so in a way that is responsible and in the budget and the autumn statement, I was able to reduce taxes without increasing borrowing and without reducing the money available for public services.

"If it's possible to do more in that responsible way, then yes, I would like to."

When asked if he thinks he needs to change his strategy to focus on public services, Mr Hunt said he "wants to put more money" towards that too, "but the way to do that is to grow the economy".

"I don't accept that it's a choice between money for public services or tax cuts. The cuts in National Insurance that I announced will mean 200,000 more people, or the equivalent of in-work that will fill around 1 in 5 vacancies across the economy.

"That is good for growth. That means more money for the NHS, for the police, for teachers, for all our public services."

Questioned by ITV News Business and Economics Editor Joel Hills over whether he will try to cut taxes before the next election, Mr Hunt said he "wants to bring down the tax burden"

The comments come after the Office for National Statistics said UK inflation has fallen to 3.2% in March from 3.4% in February.

"We're actually pretty much on track for where we thought we would be," Governor of the Bank of England, Andrew Bailey, said at an event in Washington hosted by the Institute of International Finance.

"I expect that next month's number will show quite a strong drop," he added.

In February, a 3.4% reading marked the lowest since September 2021, when it was 3.1% - but was slightly higher than economists expected.

Food prices drove the fall with prices rising by less than they were a year ago. Slowing price rises would help struggling households who have faced soaring costs in the last two years.

The prime minister hailed Wednesday’s inflation figures, saying that after a "tough couple of years" his economic "plan is working".

However, financial markets pushed back expectations for interest rate cuts after the figures were shared amid concerns over persistence in services and wage inflation.

Economists had predicted a reading of 3.1% for the month. The drop was heavily linked to a slowdown in food price inflation, which was also its lowest for more than two years.

Speaking to ITV News, Chancellor Jeremy Hunt said the numbers show the "fundamentals for the British economy are very strong".

He added that the public should feel like "we are turning a corner", but that how "people feel is a subjective measure" and his job as chancellor is to focus on the "long term of the economy".

Questioned over whether the public will feel better off by the time of a potential October general election, he added he "hopes so".

"But of course, in an election it isn't just how you're feeling now, it's a choice about the future."

"I want to bring down the tax burden," he added, before clarifying he will only do so in a way that's "responsible".

ONS Chief Economist Grant Fitzner said: “Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago.“Similarly to last month, we saw a partial offset from rising fuel prices.”

Shadow Chancellor Rachel Reeves pointed out that inflation is still higher than the Bank of England's target, adding: “Prices are still high in the shops, monthly mortgage bills are going up."

She continued: “The truth is Rishi Sunak is too weak to fix the economy his party broke and too out of touch to deliver for working people. It’s time for change. Only Labour has a long-term plan to grow our economy, cut people’s bills and make working people better off.”

Inflation for food and non-alcoholic drinks dipped to 4% for the month, from 5% in February, to reach its lowest level since November 2021.

The increased slowdown was partly driven by a fall in meat prices and lower rises for bread and cereals, the ONS said.

Furniture and household goods prices also contributed to the fall, with prices in the sector down 0.9% in March compared with the same month last year.

Elsewhere in retail, clothing and footwear inflation also slowed to 4% for the month, from 5% in February, after women’s clothing stores increased prices by less than normal for this time of year.

The largest upwards pressure came from motor fuels, after the average price of petrol rose by 2.6p per litre between February and March 2024 to stand at 144.8 pence per litre, according to the ONS.

The overall reduction in inflation comes after rate setters at the Bank of England hiked interest rates to a 15-year-high of 5.25% in order to put pressure on demand.

Economists expect inflation for April to show a further fall in inflation, supported by another drop in energy prices, as CPI moves closer towards the central Bank’s 2% target rate.

This has also increased speculation that the central bank could cut interest rates in the coming months, although Governor Andrew Bailey and other members of the Bank’s monetary policy committee have so far suggested it is too early for a cut.

Ian Stewart, chief economist at Deloitte, said: “Inflation is in retreat but the Bank of England cannot yet be sure that it is beaten.

“Headline inflation is likely to drop below 2% in the coming months, but to be confident it will stay there wage pressures need to ease.

“With earnings growing at close to 6%, and the economy reviving, the Bank will be in no hurry to cut interest rates.”

On Tuesday, official figures showed regular wages growth, excluding bonuses, at 6% in the three months to February, which was a slight fall but also above economist predictions.

Rishi Sunak told broadcasters: “Having been 11% when I became prime minister, it’s now fallen to just over 3%, the lowest level in two-and-a-half years.

“We have also seen energy bills falling, mortgage rates falling and, just this week, data showed people’s wages have been rising faster than inflation for nine months in a row.”

He added: “My simple message would be: if we stick to the plan, we can ensure that everyone has a brighter future.”

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