London politics latest LIVE: Jeremy Hunt rips up mini-budget plans on tax and energy
Pound and bonds rally after Chancellor swings ax at mini-budget
The pound has strengthened and UK government bonds have rallied further as Jeremy Hunt announced plans to reverse key policies in the former Chancellor’s mini budget.
Sterling rebounded by more than 1.2% to 1.139 against the US dollar shortly after Mr Hunt gave his emergency statement to calm the financial markets.
Yields on 30-year government bonds, or applies, eased back further by around 10%, as the new Chancellor set out plans to shave off billions of government debt.
The interest on long-dated bonds hit a low of around 4.32% shortly after the first announcement.
Chancellor: We will take whatever tough decisions are necessary
“Growth requires confidence and stability and the United Kingdom will always pay its way,” Chancellor Jeremy Hunt said in his statement.
“This Government will therefore take whatever tough decisions are necessary to do so,” he added.
Liz Truss held meeting at 10am to discuss scrapping mini-budget
Prime Minister Liz Truss held a political cabinet call at 10am to discuss the decision to scrap the mini-budget measures.
Chancellor Jeremy Hunt set out the “worsening global economic situation, with interest rates rising around the world as monetary policy returns to a sense of normality”, a No 10 source said.
“Because of this, the Government is adjusting its program while remaining committed to long-term reforms to improve growth such as investment zones and speeding up infrastructure projects.”
Mr Hunt is expected to meet all secretaries of state this week to decide on future spending plans which will then be submitted to the Office for Budget Responsibility on Friday.
Jeremy Hunt: ‘Stability is the most important thing right now’
The Government’s main objective will be ensuring “stability”, the Chancellor has said.
Indicating that some Government spending would have to be cut, Jeremy Hunt said: “The most important objective for our country right now is stability.
“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 values of pensions.”
Chancellor says he is ‘extremely confident’ about UK’s economic future
Tearing up the government’s so-called mini-budget, the Chancellor said he remains “extremely confident” about the country’s long-term economic prospects.
But he added: “Growth requires confidence and stability and the United Kingdom will always pay its way. This Government will therefore take whatever tough decisions are necessary to do so.”
Energy bills support will now only last until April…
Help with energy bills for households will now only last until April, Jeremy Hunt has announced, along with a review to find a “new approach” that will “cost the taxpayer significantly less”.
The new Chancellor said in his emergency statement: “The biggest single expense in the growth plan was the energy price guarantee.
“This is a landmark policy supporting millions of people through a difficult winter ad today I want to confirm that the support we are providing between now and April next year will not change.
“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.
“So I’m announcing today a Treasury-led review into how we support energy bills beyond April next year. The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.
“Any support for businesses will be targeted to those most affected and the new approach will better incentivize energy efficiency.”
Government spending will be cut, says the Chancellor
The Chancellor has confirmed Government spending in “some areas” will be cut.
Jeremy Hunt said: “There will be more difficult decisions, I’m afraid, 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.
“But as I promised at the weekend, our priority in making the difficult decisions that lie ahead will always be the most vulnerable and I remain extremely confident about the UK’s long-term economic prospects as we deliver our mission to go for growth.”
Tax cut reversals will raise billions, says the Chancellor
New Chancellor Jeremy Hunt has said his tax cut reversals will raise some £32 billion a year as part of efforts to get the public finances back on track.
In an emergency statement, he said: “The measures I’ve announced today will raise every year around £32 billion.”
Hunt scraps plan to reduce basic income tax
The Chancellor announced he is scrapping the government’s plan to cut the basic rate of income tax to 19 per cent from April 2023.
“It is a deeply held Conservative value – a value that I share – that people should keep more of the money that they earn,” he said. “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.
“So I’ve decided that the basic rate of income tax will remain at 20 per cent and it will do so indefinitely until economic cicumstances allow for it to be cut.”
Chancellor abolishes string of tax measures
He added: “Whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cut to dividend tax rates, the reversal of off-payroll working reforms introduced in 2017 and 2021 , the new VAT-free shopping scheme for non-UK visitors, or the freze on alcohol duty rates.”