Increase productivity and taxes may be cut, Hunt urges public sector - after Boris' jibe to 'be more Conservative'
12 June 2023, 23:32 | Updated: 12 June 2023, 23:47
Taxes may cut if public sector productivity is boosted, Jeremy Hunt has said.
The Chancellor has maintained that bringing down inflation must remain the government's "immediate priority" in order to pave the way for increased growth.
Speaking at the Centre for Policy Studies' (CPS) Margaret Thatcher conference on Monday, Mr Hunt said this should be only the "starting point" of the UK's economic mission.
It comes after Boris Johnson demanded that the government "cut business and personal taxes rather than endlessly putting them up" as he announced his resignation from Parliament.
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According to Mr Hunt, keeping up with projected spending pressures would mean increasing annual tax revenues by £200 billion by 2071, or doubling income tax and main rate of employee national insurance.
However, if productivity growth in the public sector increased by 0.5 per cent annually, the "gap" between anticipated growth and anticipated spending up to 2050 would be closed, he said.
Mr Hunt told the conference: "All advanced economies face slower growth. We need to find a smarter way out of the challenge.
"Tackling inflation must be the immediate priority - but that's the starting point, not the end point. We need growth driven by increases in productivity.
"If we replicate the productivity growth we've seen in the private sector and apply it to the public sector, we start to increase GDP.
It would mean increasing tax revenues, without increasing tax rates - and it will put us on a sustainable path to lower taxes."
Despite pressure from those within his party, the Chancellor has maintained he will not lower taxes where it is not fiscally responsible to do so.
The Office for National Statistics said CPI inflation fell to its lowest level for more than a year in April, at 8.7%, down from 10.1% in March, as energy prices stabilised after sky-high rises a year ago.
But it was higher than forecast by economists, who had pencilled in a drop to 8.2% in April.
Labour branded Mr Hunt's comments an "admission of failure" from the Government.
Shadow chief secretary to the Treasury Pat McFadden said: "The Chancellor's speech is an admission of failure from the Government.
"Finally the penny seems to have dropped for the Chancellor that economic growth has not been good enough.
"But over the past decade the country has been let down by a Government that has pursued failed trickle down economics instead of recognising growth comes from the efforts of all.
"Labour has been saying for some time now that the UK needed to boost its growth rate to make the country's economy stronger and increase living standards.
"That's what we aim to do and to make sure that every part of the country feels the benefits of the economic growth we secure."