LAST UPDATE | 17 Oct 2022

NEW BRITISH CHANCELLOR Jeremy Hunt has rolled back almost all of the tax measures within the UK Government’s mini-budget three weeks ago.

In a statement this morning, Hunt said that he would be reversing “almost all the tax measures announced in the growth plan” and that the proposed basic income tax cut from 20% to 19% would not go ahead indefinitely.

“We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation,” said Hunt.

“So 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 cuts 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 freeze on alcohol duty rates.”

New UK Chancellor Jeremy Hunt has confirmed that the British Government will be scrapping plans to cut the basic rate of income tax from 20% to 19% pic.twitter.com/XpxW8EEEqF

— TheJournal.ie (@thejournal_ie) October 17, 2022

On the income tax reversal, Hunt said:

“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 decided that the basic rate of income tax will remain at 20% and it will do so indefinitely until economic circumstances allow for it to be cut,” Hunt added.

Hunt said that these measures are expected to raise £32 billion (€37 billion) a year.

He also confirmed that the UK’s energy price guarantee would only remain in its current form until April due to its massive cost.

The new chancellor said that after April, the scheme will be reviewed to find a cheaper alternative that will be more targeted to support “those in need”.

Hunt also confirmed that there would be cuts in spending, saying that there would need to be “difficult decisions”.

“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.”

Labour has been granted a House of Commons urgent question on the economic situation after UK Prime Minister Liz Truss refused to come to the House after the sacking on Friday of her Chancellor, Kwasi Kwarteng.

It is expected to take place at 3.30 pm. Hunt is then expected to address the Commons and will take questions from MPs.

Leader of the House Penny Mordaunt will respond to Labour’s Commons urgent question on Truss’s behalf at 3.30 pm, Downing Street has confirmed.

Truss’ decision to send Mordaunt, her former Tory leadership rival, is likely to raise further questions about her authority. 

In a tweet after Hunt’s statement, Truss backed her Chancellor, saying that the Government was “addressing the serious challenges we face in worsening economic conditions”.

“We have taken action to chart a new course for growth that supports and delivers for people across the United Kingdom.”

Reacting to the plan, Scottish First Minister Nicola Sturgeon said that both Truss and her Government have been left without “a shred of credibility”.

“There’s no doubt this is a self-inflicted crisis for Liz Truss and it is humiliating in quite an unprecedented way in terms of the climbdown,” said Sturgeon.

“I think the sooner this Prime Minister and indeed this entire government departs office, the better that will be for everyone.”

Leadership challenge?

While Hunt has sought to calm the markets with a series of U-turns on the mini-budget, these efforts could come to nought this week if Tory MPs decide that a change of leader is required, with three members of Truss’s parliamentary party already breaking ranks to call on her to go.

Crispin Blunt, Andrew Bridgen and Jamie Wallis all called on the prime minister to quit yesterday, while other senior figures within the parliamentary party expressed deep unease with Truss’s leadership but stopped short of calling for her to go.

Blunt was the first MP to demand her exit, telling Channel 4’s Andrew Neil Show yesterday: “I think the game is up and it’s now a question as to how the succession is managed.”

Tory MP Robert Halfon, chairman of the Commons Education Committee, appeared on Sky News and declined to deny that MPs are considering installing a new leader.

“We’re all talking to see what can be done about it.”

“Over the past few weeks, the Government has looked like libertarian jihadists and treated the whole country as kind of laboratory mice,” he said.

Senior Conservative Alicia Kearns also told Times Radio that the question of whether Truss should continue in charge is “incredibly difficult”.

Labour added to that pressure, with Keir Starmer calling on the prime minister to appear before the Commons today.

The Labour leader quipped that Truss is now “in office but not in power”.

It comes as a new poll, first published in the Guardian, predicted a landslide for Labour and wipe-out for the Tories.

The poll, by Opinium for the Trades Union Congress and using the MRP method to estimate constituency-level results, put Labour on 411 seats compared to the Tories on 137.

Additional reporting by Press Association