Goodwill Hunt None

Chancellor Jeremy Hunt is preparing to deliver his second fiscal set piece as we continue to grapple with soaring inflation rates, record energy prices and a continued squeeze on the cost of living.

A set of numbers even maths prodigy Will Hunting would have struggled with.

It’s the first opportunity for the Chancellor to make his mark on the UK’s finances after using his Autumn Statement to overturn many of the measures announced by his predecessor Kwasi Kwarteng in his disastrous mini-Budget, which created chaos across financial markets.

Coming just months after Rishi Sunak established "economic stability" as one of his key priorities for the year, I don't expect Hunt to deliver any major bombshells next week as he seeks to repair the reputational damage wrought by Liz Truss’s tax-slashing economic agenda.

But Hunt’s plan to steady the ship with a slimmed-down set of fiscal measures comes amid a backdrop of clamouring for the Chancellor to cut the UK’s tax burden or increase public spending to help alleviate pressure in the public sector.

Those seeking to influence Treasury thinking have been buoyed by January’s figures from the Office for Budget Responsibility (OBR), which showed a surprise surplus following stronger than expected self-assessment tax receipts and a forecasted drop in global energy prices, which could help dampen inflation rates at a quicker than expected pace.

Both in public and behind the scenes, Conservative MPs are lobbying hard for the Chancellor to slash the tax burden ahead of the next general election, with senior party figures saying the Spring Budget should be used to “show there is a path” to lower taxes.

One of the major calls is for Hunt to scrap the planned rise in corporation tax, which is set to rise from 19% to 25% in April, with Tory MPs arguing the downward pressure on investment as a result of the change will outweigh the benefits of an increased tax take.

With a lower headline rate than many other countries – even after the proposed increase – others have suggested that sticking to the corporation tax change could be offset with a more generous tax deduction plan, such as expanding the allowance to include investment areas such as R&D spend.

But Hunt’s public statements suggest the additional fiscal headroom is unlikely to alter his current debt reduction strategy, saying it was “vital” to stick with his medium-term vision to stabilise the UK economy before making any significant changes to the tax and spend regime.

My prediction is that any significant rabbits will be held back until the Autumn, where an improved economic picture could give Hunt the opportunity to announce a wave of tax cutting measures in preparation for a potential Spring 2024 general election.

I’ll give some long shots though, as I do expect him to sneak in some surprises that are likely to be glossed over as unimportant in that they affect the few, not the many.

1. A Lifetime Limit on ISA values. It happened to pensions, and I can’t see ISAs getting away with it forever. So how much? £500k may be too low, so if it announced, I would think a lifetime savings limit of £1m would be a sneaky starting point, only affecting a small number…for now.

2. An increase in the Money Purchase Pension Allowance. This is a restriction on saving into pensions if you have already started drawing income from your pensions. It's currently set at £4,000, as opposed to the £40,000 of available allowances for those who have not drawn their pension. Pension freedoms were about flexibility, so needing to draw an income during a cost of living crisis should not restrict your future ability to make pension payments once things return to normal.

My final prediction is there will be nothing to satisfy the masses save for a freeze on alcohol and cigarette duties.

As Robin Williams said to orphan Matt Damon in Good Will Hunting (for those who haven’t pieced the references together yet), “Do you think I would presume to know the first thing about who you are because I read "Oliver Twist?", this current Government do seem to think they understand the UK populace just because they’ve watched “The Royle Family”.