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Jeremy Hunt: We will reverse almost all mini-budget tax cuts Jeremy Hunt scraps almost all mini-budget as Liz Truss battles to remain PM
(about 4 hours later)
The lower rate of 20p tax will remain “until economic circumstances allow for it to be cut" says the chancellor.The lower rate of 20p tax will remain “until economic circumstances allow for it to be cut" says the chancellor.
The lower rate of 20p tax will remain “until economic circumstances allow for it to be cut" says the chancellor.The lower rate of 20p tax will remain “until economic circumstances allow for it to be cut" says the chancellor.
The government will reverse almost all the tax cuts it announced last month, Chancellor Jeremy Hunt has said. Chancellor Jeremy Hunt has axed most of Liz Truss's mini-budget, as the prime minister tries to remain in power.
He also announced that beyond April support for household and business energy bills would be reviewed. Mr Hunt announced he was scrapping "almost all" of the tax cuts announced by the government last month, in a bid to stabilise the financial markets.
Mr Hunt said economic growth required "confidence and stability", adding that the UK "will always pay its way". A minister had to deny Ms Truss was hiding "under a desk" after the prime minister did not attend a clash with Sir Keir Starmer in the Commons.
But the announcement means the chancellor has unwound almost all of Liz Truss's key measures announced in September's mini-budget. Five of her own MPs have now called on her to resign.
The BBC's political editor Chris Mason said this showed "the Truss programme for government is dead". Many more Conservative MPs are calling on the prime minister to quit in anonymous briefings.
One former cabinet minister told the BBC: "She is a goner. [The chancellor's statement] put it beyond any doubt. Downing Street insisted the prime minister remains in charge.
"What is the point of Liz Truss? That is the question… there is literally no point," they added. The BBC's political editor Chris Mason said the chancellor's tearing up of her economic strategy showed "the Truss programme for government is dead".
A Downing Street spokesman said the PM and chancellor were working closely together, and sidestepped questions on whether Ms Truss would be resigning.
Ms Truss rejected a Labour request that she should appear before MPs to explain the U-turns herself, and sent Commons leader Penny Mordaunt instead.
She arrived in the Commons just before the chancellor gave a statement to MPs and left shortly after he began taking questions.
Live updates: New chancellor reverses almost all tax measures
What Jeremy Hunt's statement means for youWhat Jeremy Hunt's statement means for you
Among the measures to be reversed are plans to cut the basic rate of income tax from 20p to 19p from April. Mr Hunt said the planned cap on the annual cost of energy at £2,500 for a typical household for two years will be scaled back.
Mr Hunt said the rate would remain at 20p "indefinitely until economic circumstances allow for it to be cut". That pledge will now only last until April, after which a new approach will be found "that will cost the taxpayer significantly less than planned".
However, he said the cuts to stamp duty paid on house purchases and the scrapping of the National Insurance rise would continue. A penny cut in income tax due in April will now not happen. The chancellor said the rate would remain at 20p "indefinitely until economic circumstances allow for it to be cut".
The plan to remove the cap on bankers' bonuses is another of the mini-budget policies to survive. Other mini-budget measures to be axed include:
Other measures to be axed include:
Cuts to dividend tax ratesCuts to dividend tax rates
The reversal of off-payroll working reforms introduced in 2018 and 2021The reversal of off-payroll working reforms introduced in 2018 and 2021
VAT-free shopping for international touristsVAT-free shopping for international tourists
The freeze on alcohol duty ratesThe freeze on alcohol duty rates
Mr Hunt said the measures, including the previously announced freeze on corporation tax and keeping the top rate of income tax, would raise around £32bn a year. And the new chancellor made clear there will be cuts in public spending to come - something the prime minister said last week she was "absolutely" not planning.
Last month, the government announced it would cap the typical household energy bill at £2,500 for two years. The government had already abandoned plans to scrap the 45p rate of income tax for top earners and had U-turned on a promise not to increase corporation tax.
However, Mr Hunt said this pledge would now only last until April and beyond then there would be a new approach "that will cost the taxpayer significantly less than planned". However, he said the cuts to stamp duty paid on house purchases and the scrapping of the National Insurance rise would continue.
The prime minister has repeatedly highlighted how the government's energy support package lasted longer than the six months promised by Labour. The plan to remove the cap on bankers' bonuses is another of the mini-budget policies to survive.
Mr Hunt said there would be "more difficult decisions" on tax and spending and some areas would need to be cut. Mr Hunt, speaking during an emergency statement in the Commons with Ms Truss behind him, said the UK "funds our promises and pays our debts".
Last week, Ms Truss said she was "absolutely" not planning public spending cuts. He said "when that is questioned - as it has been - this government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances".
Mr Hunt later told the Commons a new Economic Advisory Council would be formed to provide independent expert advice, alongside that from the Office for Budget Responsibility. "That means decisions of eye-watering difficulty."
Asked if he would introduce a "proper" windfall tax on energy companies, Mr Hunt said he was "not against the principle" of taxing profits that are "genuine windfalls", adding that "nothing is off the table". In response to the chancellor's new strategy, financial markets - which had been spooked by the prospect of unfunded tax cuts along with emergency interventions in the energy market and the cost of Covid-19 support - appeared to calm. The pound rose and the cost of government borrowing fell.
Ms Truss had previously ruled out a further windfall tax on energy companies. Mr Hunt told the Commons a new Economic Advisory Council would be formed to provide independent expert advice, alongside that from the Office for Budget Responsibility.
Asked if he would introduce a "proper" windfall tax on energy companies, Mr Hunt said he was "not against the principle" of taxing profits that are "genuine windfalls", adding that "nothing is off the table". Ms Truss had previously ruled out a further windfall tax on energy companies.
Before the prime minster appeared at the chancellor's statement, Labour leader Sir Keir Starmer accused her of "hiding away, dodging questions" at an Urgent Question in the Commons. Instead, Ms Truss sent Commons Leader Penny Mordaunt in her place for the clash.
In a series of tense exchanges, Ms Mourdant told MPs the "prime minister is not under a desk" hiding to avoid difficult decisions. She also denied there had been a "coup" to remove her.
Prime Minister Liz Truss appeared alongside the chancellor for his statementPrime Minister Liz Truss appeared alongside the chancellor for his statement
Meanwhile, Angela Richardson became the fourth Conservative MP to publicly call for Ms Truss to stand down. Meanwhile, Sir Charles Walker became the fifth Conservative MP to publicly call for Ms Truss to stand down.
Ms Richardson, who backed Ms Truss's rival Rishi Sunak during the leadership campaign, told Times Radio problems with the public finances were "100% down to the prime minister" and it was not "tenable" for her to stay on any longer. He told Sky News: "I think her position is untenable. She has put colleagues, the country, through a huge amount of unnecessary pain and upset and worry".
She joins Tory MPs Crispin Blunt, Andrew Bridgen and Jamie Wallis in openly calling for the PM to go. He joins Tory MPs Angela Richardson, Crispin Blunt, Andrew Bridgen and Jamie Wallis in openly calling for the PM to go. Many others are privately saying Ms Truss cannot remain prime minister.
Many others are privately saying Ms Truss cannot remain prime minister. Former chief whip Andrew Mitchell said the prime minister had just a fortnight to save her premiership and "if she cannot do the job, she will be replaced".
Under current Conservative Party rules, Ms Truss is safe from a no confidence vote by Tory MPs to oust her for a year. The rules could be changed, however sources suggested to the BBC that the 1922 committee of backbench MPs, who set the rules, would prefer the prime minister to jump before she is pushed. Under current Conservative Party rules, Ms Truss is safe from a no confidence vote by Tory MPs to oust her for a year.
Some Tories have suggested putting forward just one candidate to replace her, with MPs choosing their next leader in a couple of days without consulting members, as would normally happen. The rules could be changed, however sources suggested to the BBC that the 1922 committee of backbench MPs, who set the rules, would prefer the prime minister to jump before she is pushed.
The three names being widely discussed are Defence Secretary Ben Wallace, Commons leader Ms Mordaunt and former Chancellor Mr Sunak. Before her appearance at the chancellor's statement, the prime minister had met with 1922 Committee chairman Sir Graham Brady, who is likely to have brought up her lack of support among Tory MPs.
However, there is little agreement over who should take over from Ms Truss if she is removed. Allies of Ms Truss have acknowledged it was a crucial 24 to 48 hours for her premiership. However, there is little agreement over who should take over from Ms Truss if she is removed.
Tory MP Ben Bradley said the chancellor's statement effectively rendered the political fallout of the government's mini-budget and the slump in polls for the Conservatives "entirely pointless".
"Right back where we started, just far less popular than before," he added.
Labour said the Conservatives had "lost all credibility".Labour said the Conservatives had "lost all credibility".
"The chancellor said that growth requires 'confidence and stability' yet it's clear that the Tories can't provide this," shadow chancellor Rachel Reeves said."The chancellor said that growth requires 'confidence and stability' yet it's clear that the Tories can't provide this," shadow chancellor Rachel Reeves said.
The Liberal Democrats' Treasury spokeswoman Sarah Olney called for a general election to ensure "stability".The Liberal Democrats' Treasury spokeswoman Sarah Olney called for a general election to ensure "stability".
SNP Treasury spokeswoman Alison Thewlis said the now virtually scrapped mini-budget had caused "huge economic pain", adding that she was worried about suggestions of a further "tightening to purse strings".SNP Treasury spokeswoman Alison Thewlis said the now virtually scrapped mini-budget had caused "huge economic pain", adding that she was worried about suggestions of a further "tightening to purse strings".
The financial markets appeared to respond positively to the chancellor's announcement, with government borrowing costs falling and the pound rising against the dollar.
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