Chancellor says welfare reforms and AI could help end ‘ever-rising taxes’

Chancellor Jeremy Hunt has said welfare reforms and the integration of artificial intelligence into the public sector could be the way to end the “vicious circle of ever-rising taxes”.

The Cabinet minister told The Times that using technological advances in teaching, policing and healthcare would be one way of streamlining the state and reducing the burden on the public purse.

He said artificial intelligence (AI) will lead to the “biggest transformation of public services in our lifetimes”.

The Conservative Party is due to gather in Manchester on Sunday for the start of its annual autumn conference, with Tory grandees clamouring for tax cuts.

We need to find a formula that doesn’t mean that we’re on a vicious circle of ever-rising taxes

It comes after experts said the Tories will have presided over, during the time between the 2019 election and the next general election, the biggest set of tax rises since at least the Second World War.

Analysis by the Institute for Fiscal Studies (IFS) think tank said taxes will have risen to around 37% of national income, equivalent to around £3,500 more per household.

Liz Truss, Prime Minister Rishi Sunak’s short-lived predecessor — who is expected to speak out in Manchester against the current taxation levels — said high taxes were the cause of the UK’s “stagnating” economy.

“We should always seek to reduce the tax burden, especially when there’s so much pressure on family budgets,” she tweeted on Friday.

The former prime minister’s mini-budget 12 months ago, delivered by her then-chancellor Kwasi Kwarteng, sent the value of the pound tumbling and mortgage rates soaring due to the market’s adverse reaction to its £45 billion of unfunded tax cuts.

Ms Truss and 32 other Tory MPs, including former party chairman Sir Jake Berry, have reportedly vowed not to vote for the Chancellor’s autumn statement if it contains tax rises.

Mr Hunt has already said that he will not make any tax cuts at the autumn statement in November.

With a general election expected next year, the Chancellor could use his spring Budget to unveil tax cuts ahead of the next Tory manifesto being published.

He told The Times: “We’re not in a position to talk about tax cuts at all.

“The question we have to answer for the British people is: what are you doing to get yourself in a position where you can credibly lower taxes?”

He said the path to tax cuts, which some economists and Conservatives argue helps to boost economic growth, would hinge on creating a “more productive state, not a bigger state”.

“We need a state that doesn’t just deliver the services it currently delivers, but actually improves the services it delivers and recognises that there’s going to be more calls on those services with an ageing population,” he said.

“But we need to find a formula that doesn’t mean that we’re on a vicious circle of ever-rising taxes.”

Mr Hunt said artificial intelligence could “transform” the public sector, helping teachers to mark papers, assist police in identifying crime hotspots and provide doctors and nurses with “more accurate diagnoses”.

On welfare reforms, he said that 100,000 people per year were “moving off work into benefits without any obligation to look for work” — a sign he said showed that the system is not working.

He told the newspaper the welfare system had to be a “mix of carrot and stick”, with more assistance required to help people find work given there is “no shortage of jobs”.

The comments come after it was revealed that the UK economy grew faster than had first been thought between January and March this year.

The Office for National Statistics said that it now thinks that gross domestic product (GDP) rose by 0.3% in the first three months of the year, up from the 0.1% previously estimated following the availability of revised official figures.

The revision put the country’s economy ahead of both Germany and France in terms of post-pandemic performance but behind allies such as the United States, Canada, Japan and Italy.