Rishi Sunak promises to cut taxes ‘over time’ as autumn statement looms – business live

Labour’s shadow chancellor of the Duchy of Lancaster and national campaign co-ordinator, Pat McFadden, has criticised Rishi Sunak for unveiling five new long-term promises today.

McFadden says:

“The Tories have failed to deliver on so many pledges from the past. Why should people believe they will deliver on pledges for the future?

“It sums up this Conservative Party to claim things will be better tomorrow when they can’t even fix the problems of today.

“After 13 years of Conservative governments, working people have been left worse off and the Conservative economic record lies in tatters. Only Labour can get our economy growing and deliver change for working people.”

In the foreign exchange markets, the pound touched its highest level against the US dollar in two months this morning.

Sterling rose $1.251 briefly around 10am, for the first time since 13 September.

The rally came as the dollar hit a two-month low against a basket of currencies, as traders continue to bet on US interest rates being cut in 2024.

Markets have priced out the risk of further rate increases from the Federal Reserve after US inflation fell to 3.2% in October, amid several weak economic data releases last week.

Here’s The Times’ Steven Swinford on Sunak’s speech:

The Night Time Industries Association has warned that one in five night time economy businesses, such as bars, nightclubs and live music venues, face collapse in January unless “substantial tax reductions” are announced in the autumn statement.

A poll of NTIA members found that:

• 20% of Businesses polled are facing potential closure in January without government support

• 72% of Businesses are either barely breaking even or losing money

• 95% of Businesses polled requested VAT cuts for the sector

• 78% of Businesses polled requested an extension of business rates relief

Michael Kill, CEO of the NTIA, warns:

“Without swift and decisive action from the government, we are on the precipice of witnessing the collapse of the night time economy and creative industries. The extension of business rates relief and a VAT cut are not only necessary for immediate survival but are crucial for the survival of businesses, but also in laying the foundation for future growth and job creation.”

“The Night Time Industries Association remains committed to working collaboratively with the government to develop and implement effective policies that will safeguard the future of these vital industries. The time to act is now, and NTIA urges policymakers to prioritize the hospitality, night time economy and creative industries in the Autumn budget this week”.

Rishi Sunak also spoke of the need to focus on the ‘supply side’ of the economy, which may be a hint that business tax cuts will be prioritised.

He said:

We want to support businesses to invest, innovate, and grow through lower taxes and simpler regulation.

Where we provide support, it should be targeted and strategic.

Business groups have been pushing for the current temporary “full expensing regime”, which lets firms offset investment spending against their tax bill, to be made permanent.

Some City economists believe Jeremy Hunt will announce tax cuts in Wednesday’s autumn statement.

Goldman Sachs have estimated that Hunt now has approximately £25bn of headroom which he can spend and still keep within the government’s fiscal mandate, thanks to a pick-up in tax receipts.

In a note to clients, Goldman predict the chancellor will make “modest tax reductions” costing up to £10bn, keeping some firepower back for the budget next March.

They say:

Measures that the government could consider include a reduction in inheritance tax, an extension of the full expensing capital allowances regime, or a cut in stamp duty

That said, we think that larger tax cuts are less likely at next week’s statement, because a more substantial fiscal loosening would risk raising inflation and interest rates. Instead, we expect the government to conserve the majority of its headroom for the Spring Budget.

Rishi Sunak also claimmed that the UK welfare system is not currently “sustainable”.

He was asked whether the government is planning a squeeze on welfare payments in the autumn statement.

The PM declined to “pre-empt” any announcements on Wednesday, but argued the current situation isn’t “good”.

He said:

“Our view on the welfare system is that it should be compassionate, it should be fair and it should be sustainable…

“With over 2 million people of working age who are not currently working, that isn’t a good situation.

“It’s not sustainable for the country, for taxpayers. It’s not fair. But it’s also not compassionate to write people off.

“And over a decade we’ve seen the percentage of people who are essentially deemed not to be able to do any work has tripled. That doesn’t seem like a system that’s working properly. And that’s why we will look to make sure that the system is reformed and supports those who can work to do so.”

It emerged last Thursday that welfare claimants who “refuse” to engage with their jobcentre or take work offered to them may lose benefits.

And as flagged earlier [see 10.29am post], there are concerns that benefits may be raised by October’s lower inflation reading (4.6%) not September’s (6.7%) [see earlier post].

Here’s Sam Coates of Sky News on Rishi Sunak’s speech:

Rishi Sunak went on to argue that a Labour government would be as dangerous as his predecessor, Liz Truss, and her chancellor Kwasi Kwarteng.

He claimed Sir Keir Starmer and Rachel Reeves wanted to continue the “big government, big spending approach” of the pandemic, with up to £28bn of borrowing a year for Labour’s green plans.

The PM said:

“This makes the same economic mistake as last year’s mini-budget, blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts.”

Those unfunded tax cuts sparked a heavy selloff in government bonds last year, while the pound fell to a record low after Kwarteng said. last September that more tax cuts were coming.

Sunak announces five long-term promises