Interest rates will fall this year as inflation comes down, Jeremy Hunt says

Interest rates are set to fall in the coming months as inflation comes down, Jeremy Hunt has suggested.

The Chancellor said he was optimistic about the prospect of lower rates, which would in turn lead to cheaper mortgages. Inflation is expected to drop significantly on Wednesday.

He also laid out plans to use more digital technology to squeeze public spending by speeding up the time that it takes to carry out tasks such as writing medical notes.

Asked in the House of Commons whether he wanted the Bank of England to cut rates, Mr Hunt replied: “Chancellors never comment on decisions made by the Bank of England on interest rates. But what I can say is that the Office for Budget Responsibility predicted at the Budget that inflation would fall to around target in the next few months, and that gives the best possible prospect of interest rates starting to fall.”

Data from the Office for National Statistics is expected to show on Wednesday that the annual rate of inflation fell to 3.5 per cent in February, down from 4 per cent the month before. The Bank is likely to confirm on Thursday that it is holding interest rates at 5.25, but they are set to fall later this year according to financial markets.

Speaking to the House of Lords Economic Affairs Committee, the Chancellor also laid out details of his plan to restrict public spending increases to no more than 1 per cent a year. He said: “We don’t believe that the increases in the tax burden that we’ve seen in the last few years should become irreversible.”

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Mr Hunt – who suggested during his testimony that the general election could come in October – insisted it would not be possible to return to the austerity policies of David Cameron and George Osborne in order to reach that goal.

He said: “Things that we weren’t able to think about in 2010 such as the IT revolution are possible now. If you look at the transformation in the Passport Office over just the last year, where they have reduced the time it takes to get a new passport from 10 weeks to three weeks, and it’s I think probably one of the most efficient passport services in the world, they’ve done it by simply applying the things that happen in every other realm of our lives when we’re in the online world to buying a passport.

“Now if we could do that in, for example, if doctors were able to not spend so much time in the end of the day filling out medical notes, which the NHS is very optimistic they can find a way of translating a voice message from a doctor into an entry in patients’ notes, these things have real potential and we should be going for them full tilt.”

He concluded: “Public-sector productivity is a very, very important way that we will live within tight public-sector budgets over the years ahead in a way that avoids cuts to the services that are valued by the public.”

Labour’s shadow Health Secretary Wes Streeting pointed out that Mr Hunt had failed to achieve his own target of making the NHS “paperless”, telling LBC: “He said, ‘I’m glad everyone seems to forgotten about that.’ And I thought, well, hang on. I haven’t forgotten and I don’t think people working there have forgotten.”