Hunt Burns The Mini-Budget & Cuts Energy Aid.

Hunt Burns The Mini-Budget & Cuts Energy Aid.

The New Chancellor Reverses Nearly All Tax Cuts Leaving PM Liz Truss Humiliated and Endangered

Jeremy Hunt has slashed practically all of Liz Truss’s failed mini-budget, cancelling almost all of the planned tax cuts and substantially reducing the government’s centrepiece proposal to curb growing energy costs.

In a humiliation for the prime minister, who now appears to be devoid of political influence, the new chancellor stated the only remaining tax cuts would be those already in place – the move to reverse the recent hike in national insurance and a reduction in stamp duty.

Hunt, who was appointed on Friday in place of the dismissed Kwasi Kwarteng, said in a televised briefing before a full Commons statement on Monday afternoon that the proposal to decrease the basic rate of income tax by 1p to 19p in April, a substantial portion of the mini-budget, would be frozen indefinitely.

Prior to the statement, Keir Starmer used an urgent question on the economic situation granted to Labour to criticise Truss for not appearing in the Commons to answer it, instead sending Penny Mordaunt, the Commons leader, in her place.

Mordaunt informed the Commons that Truss had been “detained on urgent business,” prompting laughs from opposition MPs. Truss, according to Starmer, “had no mandate from her party and no mandate from the country.” In response to the Prime Minister’s absence, Starmer remarked, “The lady’s not for turning – up!”

Hunt stated in his statement that he intended to lower taxes, “but at a time when markets are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut.”

Other tax cuts proposed by Kwarteng, including those to dividend taxes, off-payroll employment adjustments, a VAT-free shopping scheme, and a freeze on some alcohol levies, he claimed, will be repealed.

Hunt said that the tax adjustments, designed to provide “confidence and stability,” will save the government £32 billion each year.

Even more importantly, in an effort to reduce spending and increase income, the chancellor stated that the government’s policy to control energy costs for two years, which would cost around £80 billion, will be universal only until April, and will thereafter be focused on poorer households.

“This is a landmark policy supporting millions of people through a difficult winter, and today I want to confirm that the support we are providing between now and April next year will not change,” he said.

“But beyond that, the prime minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices.”

Truss’ spokeswoman indicated on Monday that she would not quit and that the prime minister was still committed to restoring economic stability and driving growth.

Truss will address the One Nation caucus at 6 p.m., followed by a reception for cabinet ministers at No. 10 at 7.30 p.m., in a bid to shore up support among the Conservative party’s more moderate wing.

Those present at a secret meeting with Tory MPs before his Commons statement said Hunt encouraged colleagues to give Truss credit for reneging on her package of tax cuts to attempt to calm markets.

Rachel Reeves, the shadow chancellor, said the Conservatives had “lost all credibility”. She added: “The chancellor said growth requires ‘confidence and stability’ yet it’s clear that the Tories can’t provide this. We are still flying blind with no [Office for Budget Responsibility] forecasts and no clarity of the impact of their mistakes.”

Truss’ administration, according to Liberal Democrat leader Ed Davey, “trashed the British economy and put hundreds of pounds on people’s mortgages.

“That is why we need a general election, to take them out of power and end this crisis,” he continued.

With the new chancellor seemingly in total control, Truss’s career in No 10 appears to be in jeopardy, with distraught Conservative MPs openly speculating if and how she may be replaced.

Shortly after his statement, a fourth Tory MP publicly called for Truss’ resignation. “I just don’t think that it is tenable that she can stay in her position any longer.”  Angela Richardson, the MP for Guildford since 2019, told Times Radio. “And I am very sad to have to say that.”

A leader cannot be formally challenged in their first year in office, according to Conservative Party regulations. The 1922 Committee, which represents Tory backbenchers, may amend this.

The new tax package was supposed to be unveiled on October 31, when Kwarteng and then Hunt was supposed to lay out the government’s formal growth strategy, along with held-back forecasts from the Office for Budget Responsibility (OBR).

This was an earlier date than Kwarteng’s intended November 23 deadline, but with currency and bond markets in chaos, it was agreed that the significant tax and expenditure adjustments would be disclosed as soon as possible.

Following Hunt’s remarks, the pound gained, and UK government bonds rose further.

The volatility within the UK’s financial markets has its engine at maximum revs with the BOE’s fiscal foot stamping hard on the brake. At some point, the engine will seize or explode! We just don’t know when?

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