The economy has “turned a corner”, says Trott as Hunt ponders tax cuts

Chancellor Jeremy Hunt is set to unveil tax cuts, measures to boost business investment and a tougher approach to welfare in his Autumn Statement on Wednesday.

Falling inflation means “we've turned a corner,” said Laura Trott, chief secretary to the Treasury.

Official figures released on the eve of the Chancellor's statement show that although government borrowing in October was higher than expected, the year-to-date figure is still lower than the budget watchdog had forecast.

Mr Hunt insisted he would be “responsible for the nation's finances” but his statement on Wednesday “will focus on how we boost business investment and get people back to work”.

Ms Trott, the under-chancellor at the Treasury, defended plans to get people off welfare and into work, saying it was the “duty” of those who could work to do so.

The plans could see those with mental health or mobility problems asked to find work that can be done from home.

According to the Times, people could see their benefits cut by £4,680 a year from 2025 as part of a major tightening of welfare rules.

Ms Trott told Sky News: “I think that if you can work, you should work to begin with, and that's what the government believes. This was the beginning of all our policies.

“Of course, there should be support for people to help them work or help them with issues they're facing, but ultimately there's a duty to citizens that if they can get out to work, that's what I have to do.”

Prime Minister Rishi Sunak has raised expectations that the autumn statement will start the process of reducing the tax burden, which is the highest in 70 years after the government was forced to raise money to respond to Covid-19 and surging prices of Ukraine war-induced energy.

He hit his self-imposed target of halving inflation by 2023, with October showing a CPI of 4.6%, although still more than double the Bank of England's target of 2%.

The governor of the bank, Andrew Bailey, warned that it is “too early” to say that inflation has been beaten.

But Mrs Trott told Times Radio: “We have turned the corner. Inflation was halved. This is really important for people at home. We know how difficult things have been.

“Real wages are, for three months now, ahead of inflation – again, that's very important to make a difference to how people feel.

“We can now talk about tax cuts and focus on growth, and that's what we're going to do.”

Figures from the Office for National Statistics (ONS) show that net public sector borrowing rose to £14.9bn last month, more than most economists had forecast and higher than the £13.7bn expected by the UK's fiscal watchdog, the Office for Budget Responsibility. (OBR).

However, despite the higher-than-forecast figures, financial borrowing year-to-date is still below official forecasts made last March, coming in at £98.3bn – £21.9bn more than a year ago earlier, although less than the OBR forecast of £115.2bn.

The ONS said borrowing rose in October due to upgraded benefits and cost-of-living payments, as well as £1.1bn in interest payable on the public debt.

Labor said the Tories were to blame for what Mr Sunack called a “national scandal” of working-age adults not in work.

Shadow work and pensions secretary Liz Kendall told Sky News: “It's very interesting to see Rishi Sunak speaking out against the fact that millions of people are out of work due to long-term illness, saying it's a scandal they've been written off. So, who did this?

“Being out of work is bad for individuals. It's bad for business and it's bad for the economy, but it happened on their watch.”

Ms Kendall accused the government of “desperately trying to wipe their hands of the last 13 years they are responsible for”.