Hunt ditches ‘almost all’ of Truss’ tax cuts as chancellor bins mini-Budget
Jeremy Hunt has binned “almost all” of Liz Truss’ mini-Budget, while also announcing that the UK’s energy bills freeze will only be universal until April.
The new chancellor confirmed more of Truss’ tax cuts have now been overturned – including the planned cut to the basic rate of Income Tax – in a bid to claw back £32bn to the Treasury’s coffers and in a humiliating blow to the Prime Minister.
The chancellor, who is now being called the “de facto Prime Minister”, made the emergency statement this morning to further calm financial markets and try to restore the government’s credibility in the eyes of international investors.
The pound surged against the US dollar and bond yields fell – meaning a drop in government borrowing costs – in response to the statement.
Plans to cut the basic rate of Income Tax from 20p to 19p have been shelved “indefinitely”, the IR35 tax regime for self-employed workers will be kept in place and there will be no changes to dividend tax rates.
The Treasury will now undertake a review of what happens to its energy bill freeze beyond April, with Hunt indicating it will be targeted only to more vulnerable households from this point.
This will likely reduce government spending by tens of billions of pounds.
Hunt warned further spending cuts will come to try and get “debt falling in the short to medium-term” as he promised “the United Kingdom will always pay its way”.
It comes as several Tory backroom plots are underway to dump the Prime Minister, after just 40 days in office, in the wake of her entire economic platform being dumped.
Hunt said “no government can control markets, but every government can give certainty about the sustainability of public finances”.
“Governments cannot eliminate volatility in markets, but they can play their part, and we will do so because instability affects the prices of things in shops, the cost of mortgages, and the value of pensions,” he said.
“There will be more difficult decisions to take on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.
“All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.”
Truss has now been forced to ditch almost all of her economic policy promises from the Tory leadership contest and is in serious danger of becoming the shortest ever serving Prime Minister.
Tory MP Tobias Ellwood told Sky News after the statement that this was the “worst crisis since Suez”, while Angela Richardson became the fourth backbencher to publicly call for Truss to be ousted.
Rishi Sunak, Penny Mordaunt, Ben Wallace and Boris Johnson have all been suggested as potential replacements for Truss.
Labour shadow chancellor Rachel Reeves said “is a Tory crisis made in Downing Street, paid for by working people, paying higher mortgage and borrowing costs”.
She said: “The humiliating climb-down on their energy plan begs the question yet again – why won’t they bring in a windfall tax on energy producers to help foot the bill?”
The TaxPayers’ Alliance, a free market think tank that was backing Truss’ original economic plans, said: “The light at the end of the economic tunnel has now been extinguished by this chancellor. Millions of hard-hit households who were desperate for an income tax cut are now facing many more months of financial misery.”