Hunt Eyes AI and Welfare Reform as Cures for 'Ever-Rising' Tax Burden

The chancellor ruled out tax cuts in the autumn, but said the AI and welfare reform can help break the 'vicious circle of ever-rising taxes.'
Hunt Eyes AI and Welfare Reform as Cures for 'Ever-Rising' Tax Burden
Chancellor of the Exchequer Jeremy Hunt speaking during the British Chambers Commerce Annual Global conference, at the QEII Centre, London, on May 17, 2023. (Jordan Pettitt/PA Media)
Lily Zhou

Chancellor of the Exchequer Jeremy Hunt has insisted the government is "not in a position to talk about tax cuts at all" while seeking to convince voters that he has a credible plan to get there.

Mr. Hunt suggested artificial intelligence (AI) and welfare reforms can help break the "vicious circle of ever-rising taxes" by boosting the productivity of both the public and private sectors.

It comes after an economic think tank said the UK's tax burden is set to reach the highest point on record.

On Friday, the Institute for Fiscal Studies said forecasts show 37 percent of the national income will go to paying taxes by the time of the next general election, the highest since records began in 1948.

It would be 4.2 percentage points higher than the tax burden during the last general election, the biggest increase during any parliamentary term since the Second World War.

In an interview with The Times of London, the chancellor said he's "not in a position to talk about tax cuts at all" as interest payments on government debt have increased by tens of billions of pounds a year.

"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.

Mr. Hunt said the UK needs a "more productive state" but "not a bigger state" so that tax can fall as a percentage of GDP.

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

Mr. Hunt said civil servants at the Treasury told him that the productivity in the public sector needs to be boosted by 0.5 percent in order to "stabilise the level of taxes as a proportion of GDP."

The report said Mr. Hunt has asked ministers how many hours are being spent on unnecessary administration work in their departments and will announce a plan in autumn.

He also proposed that the government can use AI to help free up doctors, teachers, police officers, and other civil servants from admin tasks and help them with productivity.

"For teachers, AI is something that will help massively reduce the time they spend marking papers. For police officers, when they are trying to work out which part of a city they should be going to if they want to prevent crimes from happening, AI will be extremely helpful. For doctors and nurses, AI will help them make more accurate diagnoses and prevent situations where patients are given the wrong medicines,” he said.

The chancellor acknowledged that a system overhaul will require upfront investment and insisted the Treasury "has got to" invest in technology.

When departments ran out of money in the past, typically "the first thing that gets cancelled is the IT projects, which is the one thing that could make public services more efficient,” Mr. Hunt said. “So, yes, the Treasury has got to change the way we do things, but also government departments have got to change the way they do things.”

The Chancellor also said he plans to stop people from leaving the workforce by reforming welfare.

Every year, 100,000 people have moved from underemployment to relying on welfare "without any obligation to look for work," including many who became inactive over mental health issues, he told The Times of London, adding that he's worried about the damage to the economy and the individuals involved.

The government is seeking ways to provide early treatment for mental health conditions and make it easier for sick people to remain in the workforce, he said.