Jeremy Hunthas told the Treasury Select Committee why he kept the HS2 line going to Manchester instead of listening to a Policy Exchange report saying it would be better value to have it going from West London to Birmingham.
Despite massive overspending and delays, Mr Hunt committed in the autumn statement to keeping the longer route.
“We’ve long had infrastructure that’s inferior to peer countries and if we want to be the most prosperous economy in Europe we need to fix these problems,” the chancellor said.
He added that there is a problem with how the British government implements large infrastructure projects and said the failure to have good national infrastructure is the key reason why regional imbalances in wealth exist.
Putting in good transport links will mean people can take benefit of a better way of living without having to move to London or the southeast, he said.
Jeremy Hunt has warned that families face “real challenges” as government forecasters predict the greatest drop in living standards since records began.
According to the Office for Budget Responsibility, household income will drop by 7% over the next 18 months.
In his Autumn Statement, the chancellor said tax increases and spending cuts would help tame inflation, which he blamed for the drop.
However, Labour claimed that fairer tax decisions could have been made.
Shadow chancellor Rachel Reeves called the emergency budget measures “an invoice for the economic carnage” caused by former Prime Minister Liz Truss’ policies.
It was deliberately stripped of surprises and political theatre, with many of the announcements having been trailed in the media beforehand.
Mr Hunt told the BBC’s political editor Chris Mason his plan would bring down soaring prices, while protecting public services.
“These are real challenges for families up and down the country,” he said, adding: “I’m not pretending these aren’t going to be difficult times, but there’s a plan, there’s hope – and if we follow this plan, if we stick with it, we can get through to the other side.”
In the next two years, before the next general election is due, there will be further support for households and extra money for schools, the NHS and social care in England.
Tax thresholds will be frozen until April 2028, meaning millions will pay more tax
Spending on public services in England will rise more slowly than planned – with some departments facing cuts after the next election
The state pensions triple lock will be kept, meaning pensioners will see a 10.1% rise in weekly payments
The household energy price cap has been extended for one year beyond April but made less generous, with typical bills capped at £3,000 a year instead of £2,500
There will be additional cost-of-living payments for the “most vulnerable”, with £900 for those on benefits, and £300 for pensioners
The top 45% additional rate of income tax will be paid on earnings over £125,140, instead of £150,000
UK minimum wage for people over 23 to increase from £9.50 to £10.42 an hour
The windfall tax on oil and gas firms will increase from 25% to 35%, raising £55bn from this year until 2028
The Resolution Foundation think tank said the Autumn Statement piled further pressure on “the squeezed middle” earners.
But it said increasing benefits in line with prices would make a “huge difference to those on low-to-middle incomes”.
Mr Hunt denied that he had been forced to raise taxes and reduce spending because of the turmoil caused by Ms Truss’s mini-Budget.
He said there had been mistakes, but insisted the government had “corrected those within weeks”.
He argued that other countries, such as Germany, France and America were all facing similar problems as a result of the conflict in Ukraine and rising energy prices.
The Chancellor’s tone was sober; the facial expressions of Conservative MPs business-like rather than emblazoned with smiles.
Even the opposition parties were relatively muted too: times are and will continue to be very difficult for millions of households.
For all of the numbers, the forecasts, the rhetoric, the standout statistic comes from the government’s independent analysers, the Office for Budget Responsibility: Living standards are falling further right now than at any point since the 1950s.
Bad news.
Add to the mix a chancellor wrestling with a recession; responding with tax rises – taxation levels are their highest for 75 years – and government spending below what it was expected to be.
He argues that protecting the state pension, benefits, and the announcements on spending for education and health shield the government against the suggestion this is another era of austerity.
But lots of government departments face lean years, inflation pickpocketing their spending power.
And Mr Hunt has also postponed the big spending squeezes until after the next election.
The OBR, which produced an economic forecast to accompany Mr Hunt’s statement, says high inflation and rising interest rates will lead to consumers spending less, tipping the UK’s economy into a recession “lasting just over a year”.
It predicts the economy will shrink by 1.4% in 2023 before growth slowly picks up again.
The forecaster also says that as a result of Mr Hunt’s decisions, the tax burden would rise to its highest level since the end of World War Two.
Mr Hunt described a target to reduce government debt in five years time as one of “two new fiscal rules”. But speaking on BBC Newsnight, OBR chairman Richard Hughes suggested the plan could end up only being an aspiration because the end date can be extended every year at the budget.
Attacking Mr Hunt’s plans in Parliament, Labour’s Rachel Reeves said he had introduced “a Conservative double whammy that sees frozen tax thresholds and double-digit inflation erode the real value of people’s wages”.
She accused the government of increasing taxes by “stealth” arguing that freezing the personal allowance – the amount of income someone does not have to pay tax on – would cost an average earner more than £600 per year.
Speaking to the BBC on Friday, Ms Reeves said “fairer choices around tax could have been made”, criticising the Tories for not abolishing non-dom status and instead going to the “pockets of the ordinary working man and woman”.
The Liberal Democrats said people were “being forced to pay the price for this Conservative government’s incompetence”.
The SNP’s Treasury spokeswoman Alison Thewliss said: “This is a UK so weak that no-one would wish to join it – Scotland cannot be forced to stay in broke, broken, Brexit Britain.”
There was also an attack from the chancellor’s own side with former cabinet minister, Conservative MP Jacob Rees-Mogg arguing that the measures announced were based on unreliable economic forecasts.
Meanwhile, a Conservative MP is seeking assurances from the chancellor that he will not increase fuel duty.
The tax is suppose to rise in line with inflation, but has repeatedly been frozen. The Treasury has said a final decision would not be taken until the next Budget in spring 2023.
Writing to the chancellor, Conservative backbencher Jonathan Gullis warned that a “substantial number” of Tory MPs would be opposed to a rise.
Jeremy Huntsays he accepts the “uncomfortable situation” that living standards are going down for everyone.
Speaking to reporters after his autumn statement, he claims the government is “helping every bit as much as we can” to reduce the impact on households and businesses, as well as protecting public services.
And indeed, amid the stealth tax rises and departmental cuts, spending is actually going up over the next two years under the government’s new plans.
But while Mr Hunt says he believes the measures will make the current recession “shallower”, he hints further, tougher measures could be on the horizon.
“We have been careful in a very balanced approach to make sure that we’re not making that situation worse,” says the chancellor.
Continuing with his autumn statement, Jeremy Hunt moves on to business taxes.
He says he has decided to retain the employment allowance at its new higher level of £5,000 until 2028.
“This means 40% of all businesses will pay no NICS at all,” he adds, noting that “the VAT threshold is already more than twice as high as the EU average”.
Mr Hunt says he will “make sure multinational corporations, including big tech companies, pay the right tax in the countries they operate”.
He says that reforms to tackle tax avoidance and evasion will raise an additional £2.8bn by 2027-28.
Moving onto the windfall tax,Mr Hunt says he has “no objection” to them if they are “genuinely about windfall profits caused by unexpected increases in energy prices”.
He adds that any such tax “should be temporary”.
“So taking account of this, I’ve decided that from 1 January until 28 March, we will increase the energy profits levy from 25% to 35%,” the chancellor tells MPs.
“The structure of our energy market also creates windfall profits for low carbon electricity generation.
The governmentis set to announce tens of billions of pounds worth of spending cuts and tax rises, which will affect the take-home pay and household budgets of millions of people, as well as money for key public services.
Autumn Statements take place annually, between yearly Budgets (which happen in the spring). But this one is a bigger deal than usual.
When Rishi Sunak became prime minister, he said the UK faced a “profound economic crisis”. This will be the moment where we learn exactly how his government is going to tackle the crisis.
We’re expecting Chancellor Jeremy Huntto outline what’s going to happen to some of the things that shape our daily lives, such as taxes, benefits, pensions and help with energy bills.
Hunt has said his priorities are economic stability and restoring confidence. It comes in the wake of his predecessor Kwasi Kwarteng’s disastrous so-called mini-budget. That caused market turmoil and led to the resignations of both Kwarteng and former PM Liz Truss.
We don’t know exactly what the chancellor will say, but the BBC has been told Jeremy Huntis set to announce around £30bn in spending cuts and £24bn in tax rises.
These could include:
Income tax: There has been speculation that the government could raise money through income tax changes. For example, it could decide to freeze the amount people can earn before they have to pay a higher rate of tax
Benefits and pensions: It’s likely we’ll find out whether they will rise in line with inflation
Energy prices: The chancellor will set out details about further help for those struggling with bills. However, he has warned there will be limits on help. The current energy price guarantee ends on 1 April
Windfall tax: The government may decide to raise money by increasing taxes on the profits of energy companies
Social care: Hunt may also postpone the introduction of a cap on social care costs in England. The cap is due to come into effect in October 2023, and means people would not pay more than £86,000 towards care during their lifetime
Spending cuts: The government is expected to announce billions of pounds worth of cuts to public spending. This could affect services including the NHS, schools and the police
What Jeremy Hunt sets out later is going to be a stark contrast to the “new era” promised by Kwasi Kwarteng just eight weeks ago. Taxes will go up; spending will be cut.
The aim is to reassure the markets that he can balance the books and to start to bring down the high rate of inflation, which the chancellor will call “the enemy of stability”.
He is expected to blame rising prices for higher mortgage rates, “industrial unrest” and for cutting funding for public services.
Hunt is doing this with a recession looming and in the knowledge that there are concerns on his own backbenches – so he will also promise to be “compassionate” and “fair”.
Ministers have been preparing the ground for weeks; the chancellor is likely to have headed off some big potential flashpoints – albeit not cheaply – with the expected increases to pensionsand benefits, and an expectation that the health budget will be protected.
A decision to defer some of the pain to later years – and so beyond the next election – is also likely to pose a challenge for Labour.
Almost one in four families across the UK will receive £324 from the government this month as the latest Cost of Living Payments are sent out from today (8 November 2022).
Over 8 million households in England, Wales, Scotland and Northern Ireland who claimed qualifying means-tested benefits during the eligibility period will be automatically paid £324 this month, as part of £1,200 worth of direct help for households.
The payments, starting today from the Department for Work and Pensions, are made directly into eligible recipients’ bank accounts, with no need for people to apply or do anything to receive it.
The payment reference on DWP recipients’ bank accounts will be their national insurance number, followed by “DWP COL”. For HMRC recipients the payment reference will be “HMRC COLS”.
Work and Pensions Secretary, Mel Stride said: “We understand that people are struggling and that is why we’ve consistently acted to ensure millions of low-income families are supported. We will continue to act with compassion as we navigate challenging global economic circumstances.”
“As part of a wider £37 billion package of support, this latest £324 payment will help the most vulnerable people in our society who are worrying about their finances through the winter months.”
The government’s £1,200 support package contains £400 for energy bills that is being paid in monthly instalments to all domestic energy customers between now and March 2023. It also includes a £150 Council Tax rebate for 85% of all UK households and the previous £326 Cost of Living Payment made by DWP in July and by HMRC in September.
On top of this, nearly one in ten people received the £150 disability payment in September, and a £300 addition to Winter Fuel Payments will go to over eight million pensioner households over the winter.
Chancellor of the Exchequer, Jeremy Hunt added: “Prices are rising across the world as we manage the aftershock of COVID-19 and Putin’s invasion of Ukraine. We recognise that families back home are struggling, which is why we’ve taken decisive action to hold down energy bills this winter, and provided hundreds of pounds of cash support for each vulnerable household.”
“As part of that support, over 8 million vulnerable households – almost a quarter of families in the UK – will automatically receive a second cost of living payment worth £324 in their bank account from today.”
“And while we can’t completely protect people from rising prices, my priority at the upcoming Autumn Statement will be to protect the poorest in society as we take the tough decisions necessary to fix our public finances.”
Those eligible to receive the second cost of living payment from today include people on: Universal Credit, Income-based Jobseekers Allowance (JSA), Income-related Employment and Support Allowance (ESA), Income Support and Pension Credit.
To be eligible, claimants must have been claiming and entitled to a payment between 26 August and 25 September 2022, with the exception of pensioner households, who may be able to have a new Pension Credit claim backdated.
They have until 18 December 2022 to submit a valid claim for Pension Credit, which could entitle them to the £324 Cost of Living payment. Anyone can check their eligibility for Pension Credit using the online calculator or by calling the freephone claim line, on: 0800 99 1234.
Even if you are not on a qualifying DWP benefit you may still be eligible for the £324 payment, as HMRC are also making payments to over a million people who receive Working Tax Credit or Child Tax Credit and no other eligible benefits. These will be paid between 23 and 30 November 2022 and customers do not need to contact the government or apply for the payment at any stage.
The £324 payment and the overall £1,200 package come on top of wide-ranging government support with the cost of living this winter, including an extension to the Household Support Fund, which is providing an extra £421 million between October and March to help vulnerable people with the essentials.
As well as this, the Energy Price Guarantee is ensuring people across the country pay significantly less for their energy bills, with a typical household saving around £700 this winter.
It’s sort of discombobulated because we’ve been just running 100 miles an hour.
It has calmed down a bit, but I would describe it as the calm before the storm – because of what we’ve seen in terms of the Bank of England‘s decision on lifting interest rates.
But inflation is going to peak, quite soon, and lower than perhaps expected.
They are also talking about a recession – a very long, potentially quite long recession – potentially the longest recession since records began.
So that’s all worrying for the government at a time when there is this black hole in the public finances, exacerbated by the decisions that Liz Truss took… and Jeremy Hunt, the new chancellor, has now reversed.
So Rishi Sunak and his chancellor have got a series of very difficult decisions to take on tax and spending.
How are you going to get that through the party? There are so many different views about what he should do.
A few smiles at cabinet this morning, as the chancellor was set to deliver a tough message-spending cut are on the way, and every department will have to make them.
It’s the prime minister’s first formal meeting with her cabinet – although she held a reception with them last night – since firing her former chancellor and allowing her new one to tear up her economic strategy as she sat silently beside him.
Jeremy Hunt yesterday reversed almost all of the tax cuts which have not yet been enacted and went further on income tax by saying even Rishi Sunak’s plan to cut it in two years was no longer affordable.
Today he was poised to tell cabinet ministers that all spending is under review, from the health service – where seven million people are waiting for treatment – to defence spending, pensions, and schools, as he finalises his fiscal plan.
The prime minister, who cabinet ministers concede, was forced into a U-turn by the government’s creditors, is being described in normally friendly newspapers as a “lame duck” and a mourner at the funeral of her own policies, only just falling short of calling for her resignation.
As she enters a critical week in which Conservative MPs must decide whether she has the authority to continue even in the short-term, Ms Truss will meet groups of her MPs today.
She met the One Nation group of centrist Conservatives last night where I’m told she was relatively upbeat.
Tonight, she meets the European Research Group, most of whom backed her tax-cutting agenda and will be disappointed it’s no longer viable.
Her allies take heart from the fact that if MPs moved to oust her, the Tory factions would struggle to agree on a candidate who they could unite around.
With the polls looking increasingly dire, and unpopular decisions imminent, that can very soon change.
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author and do not reflect those of The Independent Ghana
Chancellor Jeremy Hunt’s emergency statement means there is “very little stability” for families on a low income, Rachelle Earwaker, senior economist at the Joseph Rowntree Foundation has said.
Ms Earwaker told Sky News this morning that Mr Hunt yesterday chose to make “immediate” measures to bring security and stability to the markets but “no security and stability” had come to families on low incomes.
“These are families who are trying desperately to get their essentials at the moment,” she said.
“Trying to get food on their table. There is now no certainty that benefits will be uprated in April with inflation and come April as well, which is looking like a financial cliff edge for families, we don’t yet know what the energy support will be like for families.
“So I would say there is very little stability there at the moment for lower-income families.”
Asked what Mr Hunt needed to do in his Halloween fiscal update, she added: “The chancellor says that he is committed to making sure he is protecting the most vulnerable, and we absolutely need to see that benefits will be uprated in April in line with inflation.
“If not, hundreds of pounds will be cut from the budgets of families, and theywill certainly not be able to afford essentials going forward.”
Ms Earwaker went on to say the government had a “range of tough decisions coming up” and needed to be careful that if public service cuts were to happen it would not affect the most vulnerable in society.
Prime Minister Liz Truss went into “waxworks mode” in the Commons Wednesday and her performance lacked “emotional intelligence”, according to body language expert Judi James.
Speaking to Sky News today, Ms James said the body language of the prime minister was “hard to fathom” and “bizarre”.
Analysing the scenes, she said: “I would imagine the best way to describe it would be a lack of intelligence.”
Ms James went on to say Commons leader Penny Mordauntlooked like “somebody on a sinking ship for over an hour armed with a teacup” before Ms Truss “bounced in” and “started laughing and chatting behind her”, which was “strange”.
“There was no bonding going on between the two women,” she said.
The body language expert said the Tory leader then fell into “waxworks mode” and did not join in, before adding that her facial expression became “frozen” and her eyes “looked like somebody who was fighting sleep”.
“You know if you go to see a bad play or go to the cinema and you can feel your eyes beginning to droop. It was that kind of blinking going on,” Ms James continued.
“And then the only other sign we got from her body language is what I call her ‘poker tell’.
“When she doesn’t like something her chin moves from side to side.
“But apart from that, very little endorsement signals going on. Normally we’d expect to see her looking at Hunt and nodding, but she just sat there looking glazed and looking at the opposition but without any real focus .”
Asked if Ms Truss’s body language gave a hint as to whether she was determined or defeated, Ms James added: “She is determined in the brain cells, but I think generally her body is telling her she is defeated.”
This must bethe most humbling of humble moments for Liz Truss.
Six weeks after becoming prime minister she is being forced to sit in silence as a man who backed her rival in the leadership campaign rips apart her whole plan for the country and turns it into something resembling Rishi Sunak’s prospectus for the government.
Next to the chancellor, two seats away Penny Mordaunt – the woman Ms Truss beat into the Tory leadership runoff.
She has just been fielding questions in the prime minister’s place, at one point assuring MPs that the prime minister was not hiding “under a desk.”
It’s hard to see how Liz Truss comes back from this politically with her vision for the country in tatters and one-time rivals now holding the power in government.
The problem for the prime minister is this isn’t just humbling, it’s humiliating.
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author and do not reflect those of The Independent Ghana
The Truss programme for government is dead. This is a hand-to-mouth government, living hour by hour.
If you pick up the hint of panic in the air, you’re not the only one. Make that a stench. Anything apparently solid quickly becomes air.
Now, nearly every element of her prospectus has just been shredded by her new chancellor.
The statement that has just been delivered is the second yanking forward of an important economic moment for the country. Originally it was in the diary for November. Then Halloween. Now we’ve had it today.
“We will reverse almost all the tax measures” from the mini-budget, Jeremy Hunt said. What an extraordinary thing to hear.
Diaries are going out of fashion at Westminster but to be clear, there still will be a statement in a fortnight’s time, alongside those numbers about the state of the economy from the Office for Budget Responsibility.
But so nervous are those in charge of the market reaction, that they dared not leave an announcement until mid-afternoon when he’ll stand up in the Commons.
That’s right – a government so petrified by the pace of events, dragging forward a statement by a fortnight isn’t soon enough.
Not only has the planned cut in the basic rate of income tax been binned, so has the plan originally from Rishi Sunak to cut it in 2024.
The prime minister who promised to cut taxes by more than her rival over the summer, is now keeping them higher than he planned.
And even the flagship energy support package, the crutch upon which the prime minister has leant whenever asked a tricky question in the last few weeks, has shrivelled vastly.
It is now a six month package, not a two year one.
So if this feels a bit confusing this is where it is at: There had to be an interim statement before the interim statement, to try to steady the ship.
This is a ship where bits have already broken off and sunk, and where the navigation equipment – the very direction and purpose of this government – was ripped out and thrown into the sea with first the U-turns, then the ejection of a chancellor.
A ship where plenty of the crew are eyeing up the lifeboats, near certain the whole thing is going down soon enough.
“If polling suggests an alternative leader will lose fewer seats than she will, then she’s had it,” one MP not prone to exaggeration or shouting their mouth off tells me.
“Not many of us buy the idea that another leadership change is the worst case scenario. Nothing can be worse than where we are already,” they said, adding “you can’t sack your closest ally for carrying out your orders and call it pragmatism.”
Yesterday Liz Truss invited Jeremy Hunt and his family to lunch at Chequers. He has gone from backbencher life on Friday morning to the prime minister’s country retreat in Buckinghamshire 48 hours later for a three-hour meeting where I am told they were in “violent agreement”.
Some in the Tory party see him as the real prime minister now, so enfeebled is the actual prime minister’s authority. One source suggested they are working “in lockstep.”
That’s the very phrase they used to use about the bloke she blew out of the building on Friday lunchtime, the now former Chancellor Kwasi Kwarteng.
What we seem to be getting now is shock and awe in reverse – the Big Bang of radical policy ideas blitzed in one go, promised by Liz Truss when she took office – going backwards. Fast.
One source described today as a “down payment” on what the government is now promising.
Say whatever we can, as quickly as we can, to reassure the markets.
My sentence not theirs, but that’s the thrust of it.
So in details terms, the focus today is tax. And the focus in a fortnight will be spending.
Even a chancellor moving as fast as this one can’t negotiate detailed cuts across Whitehall over a single Sunday roast or whatever.
That discussion will start tomorrow in a cabinet meeting.
Remember: this is about two things: Restoring the government’s financial credibility and propping Liz Truss up in office.
IMAGE SOURCE,EPA
With things moving at such a breath-taking pace, here’s how the rest of this afternoon shakes up:
Labour tried to haul the prime minister to the Commons to answer for what is going on. But she didn’t turn up and instead sent Leader of the Commons Penny Mordaunt, putting back the chancellor’s appearance by about an hour.
Liz Truss is meeting her backbenchers, offering to see them all this week. This evening, she is hosting what is being called a “reception” for her cabinet.
What on earth is a “reception” you might ask? Well, we have.
The gist of it seems to be trying to reassure her ministers and include them in forthcoming decisions – not least the government spending cuts to come, after they were frozen out of plans before the disastrous mini-budget.
I can bring you a little nugget about one of the things that set tongues wagging last week – that throwaway remark from the King when he met Liz Truss for their weekly audience at Buckingham Palace. You might recall that King Charles said “dear oh dear” as he exchanged small talk with the prime minister as she arrived.
Inevitably some couldn’t help jump to the conclusion that he was somehow offering a commentary on the pickle she is in. I’m now told it was actually a nod of sympathy because of logistics – it was the prime minister’s second visit to the Palace in a matter of hours.
The pace of her premiership, for all the wrong reasons from her point of view, shows no sign of slowing.
The UK government will reverse “almost all” of the tax cuts announced in last month’s mini-budget in an emergency move aimed at calming investors.
New chancellor Jeremy Hunt said the strategy, which includes keeping income tax at current levels, would bring in £32bn.
The move comes after economists warned the original plans would leave a £60bn black hole in the public finances.
Mr Hunt said his priority was to restore “economic stability”.
The government’s mini-budget on 23 September sparked alarm among investors. The then chancellor Kwasi Kwarteng announced huge tax cuts on top of a plan to subsidise energy prices for two years. He did not give any detail on how the the tax cuts and extra spending would be paid for.
“At a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut,” added Mr Hunt, referring to the plan to Mr Kwarteng’s plan bring down the basic rate of income tax by 1p.
Mr Hunt noted that the instability on financial markets had a wider impact affecting “the prices of things in shops, the cost of mortgages and the values of pensions”.
Immediately after the mini-budget, investors began demanding higher rates of interest to lend to the government as the UKwas deemed a higher risk investment and borrowing costs surged to worrying levels.
The turmoil forced pension funds to sell bonds due to concerns over their solvency, and threatened to create a downward spiral in bond prices as more were offloaded which left some funds close to collapse.
The Bank of England was forced to step in to buy bonds to try and stabilise their price.
The turmoil also fed through to the mortgage market, where hundreds of products have been suspended due to concerns about how to price these long-term loans.
The Institute for Fiscal Studies (IFS) warned last week that that the chancellor would need to make “big and painful” spending cuts to put the country’s finances on a sustainable path.
The think tank predicted that with a weaker economy and promised tax cuts, there would be a large shortfall in revenue.
It calculated the government would have to spend £60bn a year less by 2026-27.
Chancellor Jeremy Hunt is to fast-track many billions of pounds worth of tax and spending measures from his debt plan, announcing them a fortnight earlier than expected.
The Treasury will outline details of the plans later on Monday.
The move is the latest in a series of U-turns after policies announced in the mini-budget sparked turmoil on financial markets.
It is designed to reassure investors that the UK’s finances are sustainable.
The announcement of the £18bn U-turn on corporation tax on Friday and the firing of Kwasi Kwarteng as chancellor did not calm rising UK government borrowing costs.
However, following the news that Mr Hunt was bringing a statement forward to Monday, the pound gained around to trade above $1.13. The news also saw the interest rate – or yield – on UK government bonds fall.
On Sunday, Mr Hunt told the BBC that nothing was off the table.
Announcements by lunchtime and then a statement to the House of Commons will see many billions more in reversals of policy, to plug a hole in borrowing forecasts worth tens of billions.
“The chancellor will make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability,” a Treasury spokesman said.
The cut to National Insurance is expected to survive, as it has already very nearly passed through Parliament.
More clarity on the extent of savings in public sector spending could also be on the cards.
The Treasury has confirmed that the measures brought forward from the debt plan “will support fiscal sustainability”.
There have been further conversations between the chancellor and the prime minister. Mr Hunt also met the Governor of the Bank of England, Andrew Bailey and the head of the Debt Management Office, which has to sell Britain’s debt, to brief them on his plans.
Monday’s moves, which could amount to a significant fiscal event in and of itself, are designed to reinject market confidence.
The aftermath of Mr Kwarteng’s mini-budget announcements on 23 September saw the pound slump to a record low of $1.03 and the cost of government borrowing rise sharply.
Analysts welcomed the news of an announcement from Mr Hunt but said the figures would come under close scrutiny.
“I think you’ll see a positive reaction to the statement, assuming that the math adds up a bit more than it did before,” Shanti Kelemen, chief investment officer at M&G Wealth, told the BBC.
The debt plan will still be published in a fortnight’s time on 31 October, alongside an official forecast from the Office for Budget Responsibility.
The prime minister has tweeted to align herself with the announcements made by chancellor Jeremy Hunt (who some Tory MPs are referring to as “de-facto PM) this morning…
The British people rightly want stability, which is why we are 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. https://t.co/P3yglx6efZ
Major cuts to public spending might not now be needed – at least not on the scale predicted a week ago, the Institute of Fiscal Studies has said.
IFS deputy director Carl Emmerson told Sky News that what we just heard was a “very big tax rising announcement”.
“A week ago it looked very difficult. We were talking abouthow would you do this [implement her economic policy, including the energy price guarantee] without any tax rises,” he said.
“And it looked like you’d have to make some incredibly difficult decisions around working age, welfare, capital spending, and around day-to-day spending on public services.
“Now, there may well still be a need to squeeze spending, given the chancellor’s tax announcement today… but it might be the kind of more credible, more deliverable end of the scale rather than what we were looking at just a few days earlier.”
Jeremy Hunt’s announcement that the energy price guarantee will be reviewed in April rather than remaining in place for two years is “incredibly welcome”, Mr Emmerson said.
When the government first announced the energy price guarantee, he was “sympathetic” to the idea that the policy might be needed for this winter, but “it always looked rather odd” that the country was committing to it for two years.
Mr Emmerson went on: “I’m very pleased to see that the government is now taking an approach saying, well, yes, this big scheme will be in place this winter. We can’t do better than that in the short run.
“But it’s now reopening the idea that we can design somethingthat will be cheaper for the taxpayer, hopefully, targeted towards those who really need it, but also preserves incentives that people have to cut back on their energy use for the following winter.”
The decision by Jeremy Hunt not to amend the energy price guarantee between now and April next year is incredibly welcome” according to Carl Emmerson, deputy director of the Institute of Fiscal Studies (IFS).
Speaking to Sky News, Mr Emmerson said when the government first announced the energy price guarantee he was “sympathetic” to the idea that the policy might be needed for this winter, but “it always looked rather odd” that the country was committing to it for two years.
Mr Emmerson said: “I’m very pleased to see that the government is now taking an approach saying, well, yes, this big scheme will be in place this winter. We can’t do better than that in the short run.
“But it’s now reopening the idea that we can design something that will be cheaper for the taxpayer, hopefully, targeted towards those who really need it, but also preserves incentives that people have to cut back on their energy use for the following winter.”
Mr Emmerson went on to say the chancellor’s medium-term fiscal plan was a “very big tax rising announcement”.
“A week ago it looked very difficult. We were talking about how would you do this without any tax rises because that was clearly a steer from Liz Truss and the then chancellor,” he said.
“And it looked like you’d have to make some incredibly difficult decisions around working age, welfare, capital spending, and around day-to-day spending on public services.
“Now, there may well still be a need to squeeze spending, given the chancellor’s tax announcement today.
“We’re not necessarily going to be not paying for public services going forward, but it might be the kind of more credible, more deliverable end of the scale rather than what we were looking at just a few days earlier.”
Sir Keir Starmer made fun of the Conservative Party this morning, pointing out that they had had four chancellors since Labour unveiled its economic blueprint.
Liz Truss was named the fourth on Friday, thus Rishi Sunak, Nadhim Zahawi, Kwasi Kwarteng, and Jeremy Hunt have all held the position since July.
Sir Keir said: “Since I set out our plans to grow the economy, the Tories have got through four chancellors.
” Our Green Prosperity Plan will create a million good jobs. And we’ll deliver GB energy, a home-grown energy company.
” Labour will build the future Britain deserves.”
Since I set out our plans to grow the economy, the Tories have got through 4 Chancellors.
Our Green Prosperity Plan will create a million good jobs. And we’ll deliver GB energy, a home-grown energy company.
Meanwhile, new Chancellor Jeremy Hunthas been speaking to the BBC on his second day on the job.
He said “actions speak louder than words” as he promised to reassure the markets with effectively a new budget in two weeks’ time.
Mr Hunt added he wants to keep as many of Liz Truss’s tax cuts as he can – while insisting: “The prime minister is in charge.”
He said: “I’m not taking anything off the table. I want to keep as many of those tax cuts as I possibly can because our long-term health depends on being a low-tax economy. And I very strongly believe that.”
He also said no government department would be immune from “efficiency savings”, as he signalled spending cuts to come.
“I’m going to be asking every government department to find further efficiency savings,” he said.
He said he hopes his fiscal statement can stabilise the markets.
“The prime minister has changed her chancellor. We are going to have a very big fiscal statement a bit like a budget in which we set out the tax and spending plans for several years ahead, and that’s going to be independently verified by the Office for Budget Responsibility.”
He appeared to rule out any future tilt at the Tory leadership.
Mr Hunt said a desire to lead the party had been “clinically excised” thanks to his previous failed attempts.
“I think having run two leadership campaigns, and by the way failed in both of them, the desire to be a leader has been clinically excised from me.
“I want to be a good chancellor. It’s going to be very, very difficult. But that’s what I’m focusing on.”
Prime Minister Liz Truss and Chancellor Jeremy Hunt will meet at Chequers today in an effort to restore the government’s economic confidence.
Mr Hunt, who took over for Kwasi Kwarteng, stated in a statement that his priority was growth “underpinned by stability.”
He warned of possible tax rises and savings in public spending, saying the mini-budget went “too far, too fast”.
Pressure is growing on Ms Truss, with reports that a group of Conservative MPs is seeking to remove her as PM.
According to former Home Office special adviser Mo Hussein, there are “definitely moves afoot behind the scenes”.
“People have been organised, some of the bigger names are getting their supporters in line,” he told BBC Breakfast, adding that the next few days would be tumultuous.
Talks of plans to oust Ms Truss come amid a series of interviews with her new right-hand man on Saturday.
Mr Hunt signalled a shift away from Ms Truss’s tax-cutting agenda and indicated he would reverse some of the key pledges made by his predecessor Mr Kwarteng, who was sacked on Friday.
He said this was necessary to ensure stability in the financial markets.
“Taxes are not going to come down by as much as people hoped, and some taxes will have to go up,” the chancellor told BBC Radio 4’s Today programme. “I’m asking all government departments to find additional efficiency savings.”
It comes as the Times reported that Mr Hunt planned to delay by a year a 1p cut to the basic income tax rate – a flagship part of the 23 September mini-budget.
However, the Treasury has so far refused to confirm the report, with a spokesman saying: “We cannot speculate on any tax changes outside of a fiscal event.”
IMAGE SOURCE, REUTERS Image caption, Truss and Hunt are meeting at Chequers, the official country residence of the prime minister
Mr Hunt is due to outline the government’s refreshed economic plan in a statement on 31 October, a task his predecessor was building up to following the aftermath of his mini-budget.
In his latest statement, released on Saturday night, Mr Hunt said: “My focus is on growth underpinned by stability. The drive on growing the economy is right – it means more people can get good jobs, new businesses can thrive and we can secure world-class public services. But we went too far, too fast.
He also said he intended to be “honest with people” about the “very difficult decisions” that had to be made “both on spending and on tax to get debt falling”.
“I will set out clear and robust plans to make sure government spending is as efficient as possible, ensure taxpayer money is well spent and that we have rigorous control over our public finances,” Mr Hunt added.
Meanwhile, the PM’s authority has come under increasing pressure – with some Tory MPs telling the BBC’s Laura Kuenssberg Mr Hunt’s appointment means Ms Truss is “in office, but not really in power”.
The prime minister’s hopes of survival could hinge on what she and her chancellor decide over the next two weeks.
There will be a budget at the end of the month that needs to convince financial markets and prove politically palatable to a fuming, mutinous Tory party.
Today’s meeting at the prime minister’s country residence is their first chance to have detailed discussions about the government’s new fiscal plan – which is expected to junk the tax-cutting agenda Liz Truss promised during the Tory leadership contest.
Jeremy Hunt has been clear that nothing is off the table and that tax rises and spending cuts will be needed. But many Conservative MPs are furious Liz Truss has led the government into this chaos and are talking privately about trying to turf her out.
One former minister predicted Ms Truss would be gone within weeks – but for now, she limps on, hoping the current turmoil subsides.
The imminent talks come as Andrew Bailey, the governor of the Bank of England, warned that interest rates may need to be raised higher than previously expected in order to keep UK inflation under control.
“As things stand today, my best guess is that inflationary pressures will require a stronger response than we perhaps thought in August,” Mr Bailey said in Washington, less than three weeks before the Bank’s monetary policy committee is due to meet.
Turning to his initial conversations with the new chancellor, Mr Bailey described an “immediate meeting of minds on the importance of stability and sustainability”.
Elsewhere in the US, President Joe Biden weighed in on the political situation in the UK, saying he “wasn’t the only one that thought it was a mistake” when asked about Ms Truss’s original economic plan.
He called the outcome “predictable” but said, while he disagreed with the prime minister’s policies, it was up to the British people.
Mr Biden also dismissed concerns about the strength of the dollar. “The problem is the lack of economic growth and sound policy in other countries,” he told a White House pool reporter.
Following the mini-budget, the pound plummeted to a record low against the dollar and the cost of government borrowing climbed as markets reacted to the package – which was not accompanied by an official assessment of how the UK economy would perform.
In an excruciating news conference– so short the gathered political press pack was left open-mouthed as she departed – Liz Truss made her already perilous political position even worse.
Be in absolutely no doubt, the prime minister is in deep trouble.
She has sacked her chancellor, committed a second major U-turn on her mini-budget, and junked the core of her economic policy.
And she did so, awkwardly and uncomfortably, in no more than eight minutes.
In an excruciating news conference – so short the gathered political press pack were left open-mouthed as she departed – Liz Truss made her already perilous political position even worse.
The aim of this breakneck change in direction was to attempt to calm markets and her Conservative colleagues, but instead, she left huge questions unanswered.
It’s worth underlining the significance of what the prime minister just announced.
First, on policy, she has buckled and reversed her position on corporation tax. She will now go ahead with the increase proposed by her leadership rival, Rishi Sunak.
During the contest to replace Boris Johnson as Tory leader, Ms Truss had said increasing the rate from 19% to 25% next April would “put off people who want to invest in Britain” and amount to “cutting off our nose to spite our face”.
It was a significant part of the platform on which she was elected Tory leader, nowhumiliatingly discarded in order to bring in around £18bn to fill the black hole left by last month’s mini-budget.
She said it was a “down payment” on the medium-term fiscal plan due to be set out on 31 October – a signal to the markets that she’s prepared to make more reversals if necessary.
Does she still believe it will put people off investing? We don’t know because she didn’t stick around at the news conference long enough to be asked.
On the sacking of Kwasi Kwarteng as chancellor, she expressed her sorrow – but again, did not answer the obvious question about how she can possibly justify his departure without her own.
she can possibly justify his departure without her own.
Image:Liz Truss and her former chancellor Kwasi Kwarteng
The chancellor, who was supposed to be one of her closest political friends, was also humiliatingly discarded – along with the government’s radical economic mission for which she had asked him to lead the charge.
The way in which the prime minister delivered this news really matters. Not just because of the lack of scrutiny that came from only taking four questions and barely engaging with them in the answers – but because her party, and indeed the markets, will have been watching to see how she handled the situation.
That news conference was not just about communicating with the public. The messages I received from Conservative MPsahead of the news conference made clear that she needed to put in a really strong, reassuring performance.
Their fears are that she is out of her depth. They want to see that she can handle being prime minister. And the early signs are that her performance today failed on both fronts.
One MP has messaged me saying it was “shockingly bad”, even by Liz Truss’s standards.
Image:Jeremy Hunt has replaced Kwasi Kwarteng as chancellor
Jeremy Hunt’s installation as the new chancellor may be intended to show the ship is being steadied – that someone with deep experience in government is at the helm of the economy and that markets do not need to fear further surprises.
But power flows from Number 10. The prime minister is the head of government. The prime minister is the person who must command the confidence of the Commons if they are to remain in post.
This prime minister looks out of her depth. “It’s not going to last,” is how one cabinet minister put it to me.
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author’s and do not reflect those of The Independent Ghana
After Kwasi Kwarteng was ousted as chancellor on Friday, the SNP’s Westminster leader Ian Blackford stated Tory prime leaders since 2010 have “collectively got us into this mess.”
Mr Blackford branded the situation a “shambles” and called for a general election after Liz Truss sacked Mr Kwarteng and parachuted former foreign secretary Jeremy Hunt into Number 11 in his place.
“We’ve really seen the credibility for financial competence, for the financial management of this government really put to bed,” he told the BBC.
“Over the last few years, we’ve gone from Cameron, we’ve had Theresa May, we’ve had Boris Johnson, we’ve now had the shambles of Liz Truss.
“None of these prime ministers have acted in the interests of the people of Scotland and collectively they have got us into this mess. It’s not another Tory prime minister that we need. We need away from Westminster, we need independence.”
Mr Blackford joined Labour leader Sir Keir Starmer’s calls for a general election, saying there had been a “whole series” of “shambolic” Tory governments.
Labour leader Sir Keir Starmerhas hit out at what he called the “grotesque chaos” of chancellor Kwasi Kwarteng’s sacking, as he accused Liz Truss of putting “party first and country second”.
It comes as the turmoil continued within the Conservative party this morning, as new chancellor Jeremy Hunt rowed back on Liz Truss’s promises on tax cuts and public spending.
Mr Hunt told Sky News there were “mistakes” in the mini-budgetand warned of tough times ahead.
Hunt warns of ‘difficult decisions’; follow politics’ latest
“We won’t have the speed of tax cuts we were hoping for, and some taxes will go up”, he said.
He also said that all government departments would have to “find more efficiencies than they were planning to find”.
Mr Hunt was appointed chancellor on Friday, an hour after his predecessor Kwasi Kwartengwas sacked after just 38 days on the job.
The Bank of England‘s help with the markets has finished today (see 4.04 pm post).
But what have today’s events done to the markets?
As Sky News business presenter Ian King explained: “30-year-gilts spiked earlier this week – hitting 5.1%, the highest level since 2002.
“That was on the back of comments made by Andrew Bailey, the governor of the Bank of England overnight on Tuesday that said pension funds only had three days in which to sort this issue out with today being the final deadline.
“The Bank started buying gilts more heavily on Wednesday and Thursday.
“You can see there on the chart the rumours in the middle of yesterday that the government was going to have to U-turn further on its mini-budget.
“And then we had rumours Kwasi Kwarteng was going to go – so you saw yields fall very, very sharply.
“They fell to as low as 4.1% this morning – a colossal move in terms of the scope of these things from 5.1% on Wednesday.
“Then we had confirmation that Mr Kwarteng had resigned – or been sacked – and you saw Liz Truss speak.
The higher the bond yield is, the more the government is going to have to pay for borrowing money.
The pound has also been tumultuous today – falling with Mr Kwarteng’s sacking, rising on Mr Hunt’s appointment, and falling on Ms Truss’s press conference.
She has sacked her chancellor, committed a second major U-turn on her mini-budget, and junked the core of her economic policy.
And she did so, awkwardly and uncomfortably, in no more than 8 minutes.
In an excruciating new conference – so short that the gathered political press pack were left open-mouthed as she departed – Liz Truss made her already perilous political position even worse.
The aim of this breakneck change in direction was to attempt to calm markets and her Conservative colleagues, but instead, she left huge questions unanswered.
It’s worth underlining the significance of what the prime minister just announced.
First, on policy, she has buckled and reversed her position on corporation tax. She will now go ahead with the increase proposed by her leadership rival, Rishi Sunak.
During the contest to replace Boris Johnson as Tory leader, Ms Truss had said increasing the rate from 19% to 25% next April would “put off people who want to invest in Britain” and amount to “cutting off our nose to spite our face.”
It was a significant part of the platform on which she was elected Tory leader, now humiliatingly discarded in order to bring in around £18 billion to fill the black hole left by last month’s mini-budget.
She said it was a “down payment” on the medium-term fiscal plan due to be set out on 31 October – a signal to the markets that she’s prepared to make more reversals if necessary.
Does she still believe it will put people off investing? We don’t know because she didn’t stick around at the news conference long enough to be asked.
On the sacking of Kwasi Kwarteng as chancellor, she expressed her sorrow – but again, did not answer the obvious question about how she can possibly justify his departure without her own.
The chancellor, who was supposed to be one of her closest political friends, was also humiliatingly discarded – along with the government’s radical economic mission for which she had asked him to lead the charge.
The way in which the prime minister delivered this news really matters. Not just because of the lack of scrutiny that came from only taking four questions and barely engaging with them in the answers – but because her party, and indeed the markets, will have been watching to see how she handled the situation.
That news conference was not just about communicating with the public. The messages I received from Conservative MPs ahead of the news conference made clear that she needed to put in a really strong, reassuring performance.
Their fears are that she is out of her depth. They want to see that she can handle being prime minister. And the early signs are that her performance today failed on both fronts.
One MP has messaged me saying that it was “shockingly bad”, even by Liz Truss’s standards.
Jeremy Hunt’s installation as the new chancellor may be intended to show the ship is being steadied – that someone with deep experience in government is at the helm of the economy and that markets do not need to fear further surprises.
But power flows from Number 10. The prime minister is the head of government.
The prime minister is the person who must command the confidence of the Commons if they are to remain in post.
This prime minister looks out of her depth. “It’s not going to last,” is how one cabinet ministerput it to me.
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author’s, and do not reflect those of The Independent Ghana
Jeremy Hunt, one of the faces of the One Nation Conservative camp within the Tory party, is the new chancellor under a Liz Truss government.
Ideologically they may see eye to eye on keeping corporation tax low – Hunt told Sky’s Sophy Ridge in July he not only wanted the tax not to rise but he wanted it slashed further – but Hunt is by no means seen as an obvious bedfellow for the prime minister.
For example, health secretary, Hunt was in favour of banning junk food adverts before 9 pm as part of a push to reduce childhood obesity. This policy was never implemented, however, as it was seen as a ‘nanny-state’ policy. This is just one example to suggest that these two heavy hitters could end up falling out.
Will Liz Truss’s libertarian instincts put her at loggerheads with her new chancellor? Or will the ideological differences between them make for a more balanced dialogue around the cabinet table?
Strategically, Truss will be hoping that appointing Hunt will assuage Tory anger and bring back the One Nation MPs out for blood. But Hunt inspires a lukewarm reaction (at best), even among sympathetic MPs.
Firstly, he was not even able to gain enough support from fellow MPs in the latest leadership race to make it past the first round of voting.
Secondly, one former cabinet minister told me: “He brings no one with him” and is “yesterday’s man”. Another former minister pleased with the hire said they were happy but not excited, and that it made little difference to Truss’s life expectancy as prime minister: “She cannot reassert her authority after this. It’s over.”
Although sacking Kwasi Kwartengmay look like a sign of strength from Truss, she has now amputated her own political right arm, making her life ten times harder.
Kwarteng and Truss were seen as ideological soulmates, something mirrored in Truss’s letter to her former chancellor where she said: “We share the same vision for our country”.
And now rebellious Tory backbenchers know the lady is for turning, she will be pulled in every which way by the increasingly divided factions of her chaotic party until she is ripped apart beyond repair.
DISCLAIMER: Independentghana.com will not be liable for any inaccuracies contained in this article. The views expressed in the article are solely those of the author’s, and do not reflect those of The Independent Ghana
Prime Minister Liz Trusssays what she has done today is make sure “we have economic stability in this country”.
She says: “Jeremy Hunt as chancellor is somebody who shares my desire for high growth, low tax economy.
“But we recognise because of current market issues, we have to deliver the mission in a different way.
“And that’s where we are absolutely committed to achieving that stability.”
Asked if she will apologise after the former Tory chancellor, Philip Hammond, said that she had trashed the party’s winning reputation for economic competence, she adds: “Well, I am determined to deliver on what I set out when I campaigned to be party leader.
“We need to have a high growth economy, but we have to recognise that we are facing very difficult issues as a country.”
The prime minister then walks off stage having only taken four questions from the press during a news conference that was less than 10 minutes.
PM Liz Trusssays she met the “former chancellor” Kwasi Kwateng today.
“I was incredibly sorry to lose him,” she says.
“He is a great friend and he shares my vision to set this country on the path to growth. Today, I have asked Jeremy Hunt to become the new chancellor. He’s one of the most experienced and widely respected government ministers and parliamentarians, and he shares my convictions and ambitions for our country.
“He will deliver the medium-term fiscal plan at the end of this month. He will see through the support we are providing to help families and businesses, including our energy price guarantee.
“That’s protecting people from higher energy bills this winter. And he will drive our mission to go for growth, including taking forward the supply-side reforms that our country needs. We owe it to the next generation to improve our economic performance, to deliver higher wages, new jobs, and better public services, and to ease the burden of debt.
“I have acted decisively today because my priority is ensuring our country’s economic stability as prime minister.”
Justice Secretary Brandon Lewis is the first cabinet minister out of the blocks to congratulate Jeremy Hunton his appointment as chancellor this afternoon.
“Congratulations Jeremy Hunt and look forward to working together to drive growth for everyone in the UK,” he posted on social media.
“Legal services are a huge part of the UK economy delivering jobs in all parts of the country.”
Congratulations @Jeremy_Hunt and look forward to working together to drive growth for everyone in the UK, legal services are a huge part of the UK economy delivering jobs in all parts of the country. https://t.co/ZzZcxZQuFq
Jeremy Hunt has been made chancellor, Downing Street has confirmed.
This comes barely an hour after Kwasi Kwarteng was relieved of his duties by Prime Minister Liz Truss.
During the leadership contest over the summer, Hunt put himself forward to be the next Tory leader but after not gaining enough support from fellow MPs he supported Rishi Sunak’s bid.
Ed Argar will take over chief secretary to the treasury – the second in command over the country’s finances.
Argar will be moving from his role at the Cabinet Office as paymaster general, swapping roles with his predecessor Chris Philp, who becomes the new paymaster general.
