Ministers must submit the outline plans for the Autumn Statement to the Office for Budget Responsibility (OBR) by Monday morning. Treasury sources also said a decision on whether to increase benefits in line with inflation or change the triple lock on pensions was also likely to be made within days so the OBR could factor that into the forecasts. Tory MPs have already protested previous proposals to break the triple lock which would increase pensions in line with inflation or to link benefits to wages rather than inflation. Early drafts of the statement contain plans for up to £35bn of spending cuts and up to £25bn of tax rises, likely to include freezing income tax thresholds and targeting dividend tax relief. A Whitehall source said the figures remained estimates and were subject to change, but Mr Hunt told an all-staff meeting he was looking for measures worth at least £50bn-£60bn. The scale of the measures was made bigger by dire forecasts from the Bank of England last week, predicting that higher interest rates would push the economy into its deepest recession since the 1930s. The Bank blamed higher energy prices and a tight labor market for the decision to raise interest rates. Hunt’s fiscal tightening is also likely to further worsen forecasts, and the Bank said the economy is already contracting and will continue to contract for eight straight quarters until the summer of 2024. The chancellor is also said to be keen to ensure the measures give the Treasury sufficient “room” for further economic shocks and ensure the plans have credibility in the market. “Filling it to the pound is not credible,” said a Treasury source, referring to the so-called fiscal “black hole”. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Tory MPs are likely to be alarmed by reported plans to raid capital gains and pension tax relief. Targeting pension tax relief at higher rates would hit those earning more than £50,270, who get 40% tax relief on their pension savings under the current system. Landlords, business owners and savers are also likely to be most affected by changes to the capital gains rules, likely to be a reduction in reliefs and allowances. Capital gains have the potential to yield billions if they were changed to match tax rates. Such a change was the Office of Tax Simplification’s top recommendation in 2020, but was rejected by Rishi Sunak last year. Hunt previously said the guiding principle would be that “those with the broadest shoulders should be called upon to carry the heaviest burden.” Sunak and Hunt are said to have agreed that the tax caps will be frozen until 2028, two years longer than previously announced. It would raise money from millions as inflation pushes more people into higher tax brackets or paying taxes for the first time. It is expected to raise £5bn a year but has been labeled a “secrecy tax”.
