Autumn Statement: Jeremy Hunt warns of challenges as living standards plunge

Families face "real challenges", Jeremy Hunt has warned, as government forecasters predict the biggest drop in living standards since records began.

The Office for Budget Responsibility says household income will fall by 7% over the next 18 months.

The chancellor said tax rises and a spending squeeze in his Autumn Statement would help tame inflation which he said had caused the drop.

But Labour said he had picked the nation's pockets with "stealth taxes".

Shadow chancellor Rachel Reeves described the emergency budget measures as "an invoice for the economic carnage" created by Prime Minister Liz Truss's mini-budget.

In a sombre statement lasting just under an hour, Mr Hunt undid much of the tax-cutting mini-budget unveiled by his predecessor as chancellor, Kwasi Kwarteng, only 55 days ago.

It was deliberately stripped of surprises and political theatre, with many of the announcements having been trailed in the media beforehand.

Under key measures announced:

Speaking afterwards, Mr Hunt told the BBC's political editor Chris Mason his plan would bring down inflation, while protecting public services.

"I'm not pretending these aren't going to be difficult times, but there's a plan, there's hope - and if we follow this plan, if we stick with it, we can get through to the other side."

The chancellor announced extra money for schools, the NHS and social care in England for the next two years.

Mr Hunt denied that he had been forced to raise taxes and reduce spending because of the turmoil caused by Ms Truss's mini-Budget.

He said there had been mistakes, but insisted the government had "corrected those within weeks".

He argued that other countries, such as Germany, France and America were all facing similar problems as a result of the conflict in Ukraine and rising energy prices.

The Chancellor's tone was sober; the facial expressions of Conservative MPs business like rather than emblazoned with smiles.

Even the opposition parties were relatively muted too: times are and will continue to be very difficult for millions of households.

For all of the numbers, the forecasts, the rhetoric, the standout statistic comes from the government's independent analysers, the Office for Budget Responsibility: Living standards are falling further right now then at any point since the 1950s.

Add to the mix a Chancellor wrestling with a recession; responding with tax rises - taxation levels are their highest for 75 years -and government spending below what it was expected to be.

He argues that protecting the state pension, benefits, and the announcements on spending for education and health shield the government against the suggestion this is another era of austerity.

But lots of government departments face lean years, inflation pickpocketing their spending power.

And Mr Hunt has also postponed the big spending squeezes until after the next election.

That could turn out to be a hospital pass to the future and, after an election, to the next government, whatever its political colour.

On public spending, Mr Hunt said government department budgets would face a squeeze because of inflation and pressure on public sector wages.

But while departments would need to "make efficiencies to deal with inflationary pressures in the next two years", overall spending in public services "will continue to rise, in real terms, for the next five years", he told MPs.

That means the Conservatives could be out of office by the time spending cuts come into effect, with the next general election expected in 2024.

Attacking his plans in Parliament, Ms Reeves said Mr Hunt had introduced "a Conservative double whammy that sees frozen tax thresholds and double-digit inflation erode the real value of people's wages."

The Liberal Democrats said people were "being forced to pay the price for this Conservative government's incompetence".

There was also an attack from the chancellor's own side with former cabinet minister, Conservative MP Jacob Rees-Mogg arguing that the measures announced were based on unreliable economic forecasts.

"I'm particularly concerned about the tax rises, when an economy is going into recession. You have to be slightly easier in a fiscal sense, than you do when you're at the peak of a boom."