Jeremy Hunt warns of making ‘difficult decisions’ on spending and tax – as he admits government went ‘too far, too fast’
Jeremy Hunt has admitted the government went “too far, too fast” and that he will have to take some “very difficult decisions” on spending and tax to get the economy back up and running.
Earlier, the new chancellor admitted there “were mistakes” in Liz Truss and Kwasi Kwarteng’s mini-budget in an interview with Sky News.
But in an apparent bid to restore trust in the government’s handling of the economy, Mr Hunt released a statement on Saturday night saying his 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 said.
He appeared to warn the public it won’t be an easy road, saying the government has to “be honest with people”.
“We are going to have to take some very difficult decisions both on spending and on tax to get debt falling but the top of our minds when making these decisions will be how to protect and help struggling families, businesses and people,” he said.
“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 was appointed as the new chancellor on Friday, following Mr Kwarteng’s sacking after just 38 days in the job.
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Can Jeremy Hunt save Liz Truss?
While some Tory MPs welcomed the new appointment as “an experienced pair of hands”, others questioned why Mr Kwarteng was the one who had to go when he was pursuing policies Ms Truss espoused in her leadership campaign.
Meanwhile, the Sunday Times is reporting that Mr Hunt will delay a planned 1p reduction to the basic rate of income tax by one year after the country’s fiscal watchdog warned that the public finances were in a worse state than expected.
Soaring interest rates
It comes as the Bank of England (BoE) said interest rates will have to be raised higher than initially hoped in the face of inflationary pressure.
In August, the Bank said it expected the rate of inflation to peak at 13% this year – and remain above 10% for a few months before falling.
But now, BoE governor Andrew Bailey says the realities of inflation might require a stronger interest rates response from the central bank.
Jeremy Hunt and Andrew Bailey. Pic: HM Treasury
Mr Bailey said he spoke to Mr Hunt on Friday and had a “meeting of minds” on the issue of “fiscal sustainability”.
Taking questions in Washington, he said: “I can tell you that I spoke to Jeremy Hunt, the new chancellor, yesterday. I can tell you that there was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that.”
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He continued: “It’s not appropriate for me to constrain the choices he makes but the very clear message I would give and it is a clear message for everybody, including a clear message for markets.
“I can tell you there is a very clear and immediate meeting of minds on the importance of stability and sustainability.”
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Can Jeremy Hunt save Liz Truss?
‘Mistakes’ in mini-budget
Reflecting on the government’s recent mini-budget, Mr Hunt told Sky News that “it was a mistake when we were going to be asking for difficult decisions across the board on tax and spending to cut the rate of tax paid by the very wealthiest”.
He added that it was also an error to “fly blind” by not accompanying the “fiscal event” with an economic forecast by the Office for Budget Responsibility, which many argue sent the financial markets into turmoil.
On tax cuts, he said: “We won’t have the speed of tax cuts we were hoping for and some taxes will go up.”
Asked if this would mean a return to austerity, he replied: “I don’t think we’re talking about austerity in the way we had it in 2010. But we’re going to have to take tough decisions on both spending and tax.”
The UK will “set out a path” to lift defence spending to 2.5% of national income in the spring, the prime minister has said, finally offering a timeframe for an announcement on the long-awaited hike after mounting criticism.
Sir Keir Starmer gave the date during a phone call with Mark Rutte, the secretary general of NATO, in the wake of threats by Moscow to target UK and US military facilities following a decision by London and Washington to let Ukraine fire their missiles inside Russia.
There was no clarity though on when the 2.5% level will be achieved. The UK says it currently spends around 2.3% of GDP on defence.
Ukraine leader Volodymyr Zelenskyy, Sir Keir Starmer and NATO boss Mark Rutte in October. Pic: PA
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A spokeswoman for Downing Street said that the two men “began by discussing the situation in Ukraine and reiterated the importance of putting the country in the strongest possible position going into the winter”.
They also talked about the deployment of thousands of North Korean soldiers to fight alongside Russia.
“The prime minister underscored the need for all NATO countries to step up in support of our collective defence and updated on the government’s progress on the strategic defence review,” the spokeswoman said.
“His government would set out the path to 2.5% in the spring.”
The defence review will also be published in the spring.
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While a date for an announcement on 2.5% will be welcomed by the Ministry of Defence, analysts have long warned that such an increase is still well below the amount that is needed to rebuild the armed forces after decades of decline to meet growing global threats from Russia, an increasingly assertive China, North Korea and Iran.
They say the UK needs to be aiming to hit at least 3% – probably higher.
With Donald Trump returning to the White House, there will be significantly more pressure on the UK and other European NATO allies to accelerate increases in defence spending.
A man has been arrested on suspicion of murder after one man died and another was critically injured in a shooting in Birmingham.
Police were called to Rotton Park Road in Edgbaston, just before 11pm on Friday, to reports that two people had been shot.
One man, in his 20s, was found in a car but was pronounced dead at the scene.
Another man, in his 30s, was found injured at a bus stop, and was taken to hospital where he remains in a critical condition, West Midlands Police added.
Firearms officers arrested a man in his 30s on suspicion of murder just before 12.30am. He remains in custody.
Officers remain on the scene, with road closures in place. The force said reassurance patrols will also be taking place.
Detective Inspector Nick Barnes said: “This is a tragic incident, and we have worked through the night to understand exactly what happened.
“We’ve already made good progress and arrested a suspect, but I still need to hear from anyone who was in the area that we’ve not already spoken to.
“This happened near the busy junction with City Road and it may be that you’ve got dashcam footage or mobile phone footage from the area just before 11pm.
“We really need to hear from you so that we can build as clear a picture as possible of what happened.”
Officers are urging anyone with information to get in contact, with anonymous tips also taken via Crimestoppers.
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