Jeremy Hunt statement: New Chancellor confirms UK Government scrapping most of mini-budget in mass U-turn

Jeremy Hunt has confirmed the UK Government is scrapping most of the mini-budget in a humiliating U-turn for Liz Truss

Making an emergency statement, the new Chancellor claimed his tax cut reversals will raise some £32 billion a year to get the public finances back on track.

They come despite the Prime Minister pledging to cut taxes during the Tory leadership contest, a decision that saw her sack Kwasi Kwarteng as Chancellor after just five weeks.

Mr Hunt has now made an emergency statement in an effort to calm the markets, with the announcement previously scheduled for Halloween.

Chancellor Jeremy Hunt. Picture: Getty Images

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

“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.”

The basic rate of income tax will remain at 20p indefinitely, having been set to reduced to 19p from April.

He explained: “It is a deeply held Conservative value – a value that I share – that people should keep more of the money that they earn.

“But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut.”

In a move that will fuel questions over the Government’s long-term plan, Mr Hunt also announced that help with energy bills for households will only last until April.

He said: “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 incentivise energy efficiency.”

In a hint of a return to austerity, Mr Hunt also hinted spending would be cut in “some areas”.

He 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.”

The Chancellor will publish the government’s fiscal rules alongside an OBR forecast, and further measures, on 31 October.

Responding, the SNP's Shadow Chancellor Alison Thewliss MP claimed Ms Truss had “run out of road”.

She said: "Liz Truss has run out of road. This is no longer a question of if but when the Prime Minister will be removed from office, after the Chancellor junked her disastrous mini-Budget.

"The Chancellor's statement was more than just another round of screeching U-turns, it also confirmed plans to usher in a new era of devastating Tory austerity which will further entrench the poverty the Tories have caused.

"Rather than delivering real and targeted support as households and businesses grapple with a cost of living crisis, the Chancellor has instead scaled back the limited support that was in place and backed plans for deep public spending cuts.

"The game is up for Liz Truss. The policies in the disastrous mini-Budget were hers and the responsibility for trashing the economy, putting people's incomes, homes and pensions at risk lies squarely at her door.

"It turns out that the only commitment she has not U-turned on was to 'hit the ground' when she took office.”