UK’s Hunt to Offer Wage Boost for Lowest-Paid Amid Tax Cut Calls

Chancellor of the Exchequer Jeremy Hunt will pledge to raise wages for the UK’s lowest-paid workers while cracking down on welfare claimants, as Conservative Party colleagues call for bolder action such as tax cuts to boost the economy.

Author of the article:

Bloomberg News

Joe Mayes and Kitty Donaldson

Published Oct 01, 2023 • 2 minute read

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(Bloomberg) — Chancellor of the Exchequer Jeremy Hunt will pledge to raise wages for the UK’s lowest-paid workers while cracking down on welfare claimants, as Conservative Party colleagues call for bolder action such as tax cuts to boost the economy.

The UK will increase the national living wage to at least £11 ($13.42) an hour from £10.42, Hunt is due to say on Monday at the Tory Party conference, according to an e-mailed statement. That will boost earnings for about 1.7 million people from April, when it takes effect.

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Hunt’s move comes amid growing discontent within the governing Conservatives over Britain’s tax burden, which has risen to its highest since World War II. Senior figures including cabinet minister Michael Gove and former premier Liz Truss are calling for taxation to be reduced ahead of a general election expected next year.

Hunt and Prime Minister Rishi Sunak have both talked down the prospect of cutting taxes at the Autumn Statement in November, saying their priority is to bring down inflation.

Read More: Sunak Faces Tax-Cut Row as Conference Gets Underway: Tory Latest

On Monday, Hunt will also say that he plans to review the sanctions regime for welfare claimants as he tries to encourage more people to return to work. Bloomberg reported last month that Hunt is considering cutting benefits in real terms at the Autumn Statement to help the public finances and further push people to re-enter the labor market.

“Since the pandemic, things have been going in the wrong direction,” Hunt is due to say. “Those who won’t even look for work do not deserve the same benefits as people trying hard to do the right thing.”

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The decision on the living wage will be in line with recommendations from the Low Pay Commission, the body which advises on the appropriate level, according to the statement.

The Tories are trying to close a double-digit polling gap behind the main opposition Labour Party but are divided on the best approach to the economy. There’s a clamor of voices on the party’s right calling for tax cuts, after they rose to their highest level in decades to pay for pandemic-era spending and energy support programs following Russia’s war in Ukraine.

On Monday Truss will call for cuts to corporation tax, while Gove said on Sunday that he’d favor reducing levies on working people. Former Home Secretary Priti Patel has also weighed in, calling the tax burden “unsustainable.”

Asked about taxes on Sunday, Sunak said he wanted to reduce them but he is currently focused on tackling high inflation — which he has pledged to cut in half this year. Inflation stood at 10.5% last December and has since come down to 6.7%.

“The best tax cuts that I can deliver to the British people right now is to halve inflation,” Sunak said on the BBC. “It’s a tax that impacts the poorest people the most.”

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