BUSINESS Secretary Jacob Rees-Mogg has refused to say if the Government plans to increase state benefits in line with inflation.
He said: “We haven’t yet got the inflation on which benefits will be based, so the figure comes out in a day or two, it’s always in the middle of the month following.
“Benefits every year rise in relation to what has happened in September. Some benefits are raised in line with inflation by statute. Some are raised in accordance with different principles, but no decision has been made on how benefits will be uprated. So we shouldn’t jump the gun on these issues.”
Asked about abandoning the proposed National Insurance rate cut, he said: “Not having the rise is extremely good policy. Bear in mind that cutting corporation tax from 28% down to 19% led to about a 50% increase in corporation tax revenues and an increase in corporation tax as a percentage of GDP.
“It actually provided more money to HMRC to pay for the public services that we need. So it’s a policy that is beneficial for everybody. It’s better for businesses, and it’s better for the Treasury.”
In an interview with Gloria De Piero and Mark Longhurst on GB News this afternoon (WEDS), he said: “The tax changes are relatively small in the context of the whole thing, they’re about 2% of GDP and that is what I was saying this morning, it was not a criticism of the Bank of England, but then a recognition of economic reality that whenever the US Federal Reserve raises rates, countries that are not raising rates as quickly will see their currencies decline in relation to the dollar.
“That always happens, that isn’t surprising. It’s not a criticism. It recognises different economic realities in different countries, but that is what you would expect to happen.”
Asked about the Office for Budget Responsibility, Mr Rees-Mogg said: “The OBR has a statutory duty to fulfil, which is well fulfilled but the OBR is run by good people. I thought Robert Chote when he ran it was a particularly capable economist but even when Robert was running it it didn’t get the forecasts right.
“The idea that the OBR will actually make a forecast that turns out to be what happens isn’t actually the case. It makes estimates which are well thought through and made by clever people, but economic forecasting is never that accurate.”
Asked about interest rates, he said: “I haven’t indicated that the bank should have increased interest rates by more. What I have commented on is the inevitable effect of the interest rate differential between the UK and the Federal Reserve, because I greatly respect the Bank of England’s independence.
“When you’re talking about the stability of the system, this requires the independence to be maintained by government ministers. So I wouldn’t dream of giving advice to the bank on what it should do.”
He added: “The Bank of England is independent and other central banks have gone at different rates from the UK central bank, some faster, some slower, and the Bank of England was trying to calculate what is the right pace to go for the UK economy.
“But you have to bear in mind that the way to stop inflation is through monetary policy. Everybody knows that. That is an interest rate tool that the Bank of England is in control of and that is the mechanism that will be used to tackle inflation and already has been used, but that’s done independently and as a consequence of ordinary policymaking.”
