Big, targeted energy package and no NI tax hike planned despite Treasury warning

Chancellor Jeremy Hunt is working on a new tax and spending plan. Credit: PA

Sources tell me that the Treasury's plan for a targeted energy package to help the most vulnerable households next April could be substantial and in line with this winter's cost of living payments.

That package was announced in May and cost £15bn. It included £400 for every household but also targeted payments- £650 for those on means-tested benefits, and top ups of £300 for pensioners and £150 for those on disability benefits.

It sounds like plans for similarly large target payments (or perhaps even larger) are being worked up within the Treasury - although some sources insist that final decisions are yet to be taken.

I've been told that the same groups are likely to be targeted- although it's not clear that there will be a repeat of universal payments.

On top of that sources have confirmed the suggestion today that the top rate of National Insurance Contributions will not increase - (and nor will income tax or VAT). That is in line with the Tories 2019 manifesto.

But on NICs - it is particularly significant - because it was Sunak's policy that he said was needed to fund NHS backlogs and social care - two critical areas of public spending.

But with the reversal of that rise (Liz Truss's key policy) now complete in parliament, having recently received its Royal Assent they won't now go back on it again.

The majority of Liz Truss' financial decisions have been rowed back on in a bid to stabilise the economy. Credit: PA

So with that in mind it felt like there was some serious expectation management from the Treasury last night, with a source briefing "it is going to be rough" with everyone paying more in tax.

That is true - of course. But the way they will raise those taxes are through frozen thresholds for NICs and income tax. That raises a huge amount of money - but often without people noticing all that much.

For example it was announced in 2021 that income tax thresholds would be frozen until 2026. That is a huge tax increase - but one that hasn't received all that much attention.

Adding NICs to that could raise an awful lot of extra money.

As for spending cuts - I know that there were some hugely painful decisions in the offing in the Department for Work and Pensions - but many of those - including the means testing of major benefits - are less likely to happen now. And I think it is fair to expect benefits to be increased in line with inflation now. 

ITV News Political Editor Robert Peston's thoughts on upcoming financial news in the government's Autumn statement

Moreover some other spending cuts could be included in the figures for post 2025 without being set out in detail line by line.

However - there will clearly be some tough decisions. It's not been decided whether the pensions triple lock - that protects the rate at which pensions rise - will remain after 2025 (although it may stay) and there are still questions over the state pension age and when it will increase.

Moreover there are reports today that public sector pay will not rise by more than 2% next year- that's a big real terms cut in the offing for teachers and nurses and many more.

The government is preparing us for the worst - and it's clear why. But there will be some decisions on 17 November that could surprise folk.

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