Chancellor reverses ‘almost all’ tax cuts in mini-budget and says energy bills support scheme to be scaled back
Jeremy Hunt has revealed he is reversing “almost all” of the tax cuts announced in his predecessor’s mini-budget and is scaling back support on energy bills.
In an emergency statement, the chancellor said a 1p cut to income tax will be delayed “indefinitely” until the UK’s finances improve instead of being introduced in April 2023 as announced in Kwasi Kwarteng’s mini-budget three weeks ago.
Mr Hunt, who only stepped into the job on Friday, said the government’s energy price guarantee will only be universal until April – not for two years as originally planned.
After April, the scheme will be more targeted following a review into how to support people’s energy bills from that time, he said.
“The government has today decided to make further changes to the mini-budget, and to reduce unhelpful speculation about what they are, we’ve decided to announce these ahead of the medium-term fiscal plan, which happens in two weeks,” Mr Hunt said.
He said the government was reversing “almost all” the tax measures announced in the mini-budget that have not yet started going through parliament.
The new tax measures would bring in £32 billion after economists estimated the government was facing a £60bn black hole in public finances with the mini-budget announcements.
The changes Mr Hunt revealed include:
- No cuts to dividend tax rates
- Repeal of the easing of IR35 rules for the self-employed introduced in 2017 and 2021
- No new VAT-free shopping scheme for overseas visitors to the UK
- No freeze on alcohol duty rates
- Basic rate of income tax to remain at 20%, not reduce to 19% from April 2023
- Energy price guarantee only until April 2023.
Mr Hunt promised: “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.
“The most important objective for our country right now is stability.”
As Mr Hunt revealed the tax cut reversals, the pound strengthened by more than 1.2% to 1.139 against the US dollar and UK government bonds rallied further, with yields on 30-year gilts easing back by around 10%.
Widely seen as the most powerful person in government now, Mr Hunt added that there will be “more difficult decisions” on tax and spending” and said all government departments “will need to redouble their efforts to find savings, and some areas of spending will need to be cut”.
The mini-budget tax cuts that will not be reversed as they are already going through parliament, are: Cancelling the Health and Social Care Levy tax due to take place in April 2023 and the stamp duty cut.
Ms Truss’ spokesman said Monday’s decision was taken jointly by the PM and Mr Hunt over the weekend and again admitted the mini-budget went “too far, too fast”.
But he sidestepped questions about whether Ms Truss would resign after another Tory joined those who started publicly calling for her to go over the weekend.
Sky News’ political editor Beth Rigby said this row back on the mini-budget is a major blow for Liz Truss, just six weeks into her premiership.
“The entire platform of the Truss administration is gone, is gone. It’s done,” she said.
“It’s genuinely shocking in terms of how a prime minister and her cabinet got this so wrong and had to reverse in such a dramatic way.”
“It’s not just the tax decisions in the mini-budget that the new chancellor now says are just not viable.
“He’s now saying that the policy platform, her big shock and awe announcement as it was billed in the run-up to that announcement is also just economic, not viable. And that is another body blow to the prime minister today.”
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‘We think she should go’ – Labour
Scottish First Minister Nicola Sturgeon used a news conference about Scottish independence shortly after Mr Hunt’s statement to say the government turmoil is “a self-inflicted crisis for Liz Truss” and “is humiliating in quite an unprecedented way”.
“I think the sooner this prime minister and this entire government departs office, the better that will be for everyone.” she added.
Labour’s shadow chancellor, Rachel Reeves, said Mr Hunt’s statement shows “the damage has been done” and said “this is a Tory crisis made in Downing Street, paid by working people with higher mortgage and higher borrowing costs”.
She said the Conservatives have “lost all credibility” and families will continue to endure huge costs.
“We’re still flying blind with no OBR forecasts and no clarity on the impact of their mistakes,” she added.
In a bid to calm the markets, the Treasury announced at 6am on Monday Mr Hunt was going to reveal parts of his medium-term fiscal plan – which was due to take place on 31 October.
Over the weekend, Mr Hunt promised to slow down Ms Truss’ tax cuts and said “some taxes will go up” as he worked on tearing up the mini-budget that has caused weeks of economic turmoil.
His comments were welcomed by the Bank of England’s governor, Andrew Bailey, who said there had been an “immediate meeting of minds on the importance of stability and sustainability” when he spoke to Mr Hunt on Friday.
The decision for Mr Hunt to make a statement on Monday was made after meetings between the chancellor, Ms Truss, Mr Bailey and the head of the Debt Management Office on Sunday night.
One man has been arrested, and further suspects are being traced, after 21 people needed medical attention following a “pepper spray” incident at London’s Heathrow Airport.
Officers were called at 8.11am on Sunday to a multi-storey car park at Terminal 3 following reports of multiple people being assaulted, said the Metropolitan Police.
A statement from the force said: “Armed officers responded to the incident and arrested a 31-year-old man on suspicion of assault, within nine minutes of the report coming in.
“He remains in custody and enquiries remain ongoing to locate further suspects.”
What we know so far:
• Police say a group of four men “robbed a woman of her suitcase” in a car park lift
• They sprayed a substance believed to be pepper spray in her direction
• People in the lift and the surrounding area were impacted
• Those directly involved are “known to each other”
• A total of 21 people were treated at the scene, including a three-year-old
• Passengers faced delays and difficulties accessing the airport
• Most of the disruption has now cleared
Fire engines responding to the incident at Heathrow Airport. Pic: @_umarjaved
Met Police Commander Peter Stevens said on Sunday afternoon that the force believes “a woman was robbed of her suitcase by a group of four men, who sprayed a substance believed to be pepper spray in her direction”.
“This occurred within a car park lift, with those in the lift and surrounding area affected by the spray,” he continued.
“Our officers are working to determine the full circumstances around what happened but we do believe this to be an isolated incident with those directly involved known to each other.”
London Ambulance Service attended the scene and treated 21 people, including a three-year-old girl. Five people were taken to hospital. Their injuries are not believed to be life-changing or life-threatening.
There was some disruption to traffic in the area and Terminal 3 remains open.
Eyewitness describes ‘absolutely terrifying’ ordeal
Witness Tom Bate told Sky’s Matt Barbet that he saw three “young men, dressed in black with their heads covered” suddenly bolt from the elevator area.
That’s when “people started coughing”, he said. “Suddenly… everyone in the room was coughing, including me, and there was a burning in my throat.
“It was one of the weirdest things I’ve ever experienced.”
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‘Significant incident’ at Heathrow Airport
Mr Bate was in the multi-storey car park at Terminal 3, having just landed from Dallas, Texas.
As he was leaving the car park, he saw “10-20 armed police officers” run in.
“The [police] did, in fact, point their gun at someone and order him to the ground and detain him,” he said. “And they got me out of the vehicle to ID the person.”
Mr Bate described the incident as “pretty intense” and “absolutely terrifying”.
‘Significant incident’
The London Ambulance Service said a “significant incident” was declared and there was a “full deployment” of resources. A London Fire Brigade spokesperson said it was also called to the incident.
Heathrow advised passengers to allow extra time when travelling to the airport and to check with their airline for any queries.
Some passengers said they were forced to wait three hours for a shuttle bus to the long-stay car park after their flight. The service usually runs every 15 minutes.
Bottles of water were handed out by staff to people waiting for buses from Terminal 3.
There was disruption to train and Tube services, with some delays on the Elizabeth Line and the Piccadilly Line, but all lines are now operating normally.
A queue to exit the Elizabeth Line at Heathrow after the incident. Pic: PA
Traffic also piled up at the M4 junction for the airport but this has since cleared.
People on social media said vehicles were being searched at the airport.
A user on X said there was a “major backlog of cars unable to leave the vicinity or enter the drop-off zone” at Terminal 3.
In footage on X, several armed police were seen in a car park.
Lando Norris won his maiden Formula 1 World Drivers’ Championship on Sunday after coming third in the deciding showdown in Abu Dhabi.
The accolade wraps up a clean sweep for his McLaren team, after they claimed the Constructors’ Championship in Singapore in October.
Red Bull’s Max Verstappen won the final race of the season from pole position, but Norris coming in third meant the Dutchman was unable to overcome Norris’s season points total of 423 – with Verstappen just two points short.
Norris’s title victory also ends Verstappen’s four-year reign at the top of Formula 1. The Dutchman was hoping to retain his crown and win a record-equalling fifth-straight Drivers’ Championship, which would have seen him draw level with F1 legend Michael Schumacher.
McLaren driver Lando Norris celebrates winning the Formula One world championship after finishing third at the Abu Dhabi Grand Prix. Pic: PA
Norris’s teammate and title rival, Oscar Piastri, finished in second place in the race but third in the overall standings finishing on 410 points.
The 26-year-old Norris is the 11th British driver to win the championship and first since Sir Lewis Hamilton in 2020.
“Thank you guys, oh my God. You have made my dreams come true, thank you so much. I love you guys. Thanks for everything, you deserve it. I love you mum, I love you dad. Thanks for everything. I’m not crying!” he said on the team radio as he crossed the line.
His victory marks a remarkable comeback to secure the title, after falling 34 points behind Piastri following the Dutch Grand Prix in August, when he suffered a late mechanical problem in his car while running second to his Australian teammate.
Lando Norris reacts after becoming a world champion after the Abu Dhabi Formula One Grand Prix. Pic: AP
But in the nine grand prix that followed, this was only the second time he was beaten by Piastri in a race.
That sequence saw him secure dominant wins in Mexico and Brazil, putting him in pole position for the maiden title.
“I’ve not cried in a while! I didn’t think I would cry but I did!” Norris to Sky Sports in his post-race interview.
“It’s a long journey. First of all, I want to say a big thanks to my guys, everyone at McLaren, my parents – my mum, my dad – they are the ones who have supported me since the beginning.
McLaren driver Lando Norris during the Formula One Abu Dhabi Grand Prix. Pic: AP
“It feels amazing. I now know what Max feels like a little bit! I want to congratulate Max and Oscar, my two biggest competitors the whole season. It’s been a pleasure to race against both of them. It’s been an honour, I’ve learned a lot from both.
“I’ve enjoyed it. It’s been a long year. We did it and I’m so proud for everyone.”
After conducting celebratory ‘donuts’ on the start-finish straight after completing his slow-down lap, Norris was embraced by his parents, Cisca and Adam, after getting out of the car along with his girlfriend, Margarida Corceiro.
Norris received congratulations from across the globe after his win, including from Prime Minister Sir Keir Starmer.
In a post on X, Sir Keir said: “Congratulations @LandoNorris, Britain’s new @F1 champion! An unbelievable season and so well deserved.”
Lottie (right) and her friends watch along at Silverstone
Norris’s fans celebrate in Silverstone
It was clear who fans at this watch party wanted to see win, and they got their wish.
There were cheers, tears and hugs of celebration as Lando Norris became the first Brit to win the World Championship in five years.
“Great race, great result,” says Jamie, who attended the watch party with his girlfriend Lottie. “We cheered every time he came on screen.”
Lottie has seen Norris race at Silverstone before, but today was even more special.
“I’ve never felt like this before,” says Lottie. “It was such an amazing experience.”
She admits, though, that for much of the afternoon she “felt sick,” nervous about how the race would pan out.
Norris only needed to be in the top three to win, but was amongst stiff competition with Max Verstappen and team mate Oscar Piastri hot on his heels.
There were groans in the crowd each time Norris slipped behind, and raucous cheers each time he closed the gap.
But it was the reaction from the Jenner family that caught my attention, crying and embracing each other when it became clear Norris had brought it home.
“The fact he has managed to get here is just everything. It’s amazing,” said Mrs Jenner.
“Pure joy that he had done it, we all love F1 as a family, it just means everything.”
But not everyone was happy. Abhi was among the few who came to support another driver.
“Go Max every time,” he says, admitting that he is “a bit gutted” by the results. “It stings a bit, but that’s the nature of the race.”
When asked what it was like to be one of the only people not there to witness Norris take the win, he says, “I felt a bit intimidated to be honest, and a bit stressed as well, but I held my own.”
Liverpool star Mohamed Salah says he has been “thrown under the bus” by the club, and his relationship with manager Arne Slot has broken down.
The 33-year-old player also suggested that next Saturday’s match against Brighton could be his last for the Reds, who are the reigning Premier League champions.
Speaking after Saturday’s 3-3 draw at Leeds, the Egypt forward told journalists he was in disbelief he had been left on the bench for the third game running.
Salah takes a selfie with fans in April. Pic: Reuters
“I have done so much for this club down the years and especially last season,” said Salah, who signed a new deal at Anfield at the end of last season. “Now I’m sitting on the bench, and I don’t know why.
“It seems like the club has thrown me under the bus. That is how I am feeling. I think it is very clear that someone wanted me to get all of the blame.
“I got a lot of promises in the summer and so far, I am on the bench for three games so I can’t say they keep the promise.
“I said many times before that I had a good relationship with the manager and all of a sudden, we don’t have any relationship. I don’t know why, but it seems to me, how I see it, that someone doesn’t want me in the club.”
He joined the club in June 2017, and has been one of the Premier League’s best players.
Asked if his relationship with Slot had broken down, he said: “Yeah, there’s no relationship between us. It was a very good relationship and now all of a sudden there is no relationship.”
Salah will play at the Africa Cup of Nations (AFCON) for Egypt on 15 December and has been linked with a January move to the Saudi Pro League.
On Tuesday, Liverpool face Inter Milan away in the Champions League.
Speaking about the Brighton match at Anfield next Saturday, he admitted: “I said to [my family], come to the Brighton game. I don’t know if I am going to play or not, but I am going to enjoy it. In my head, I’m going to enjoy that game because I don’t know what is going to happen now.
“I will be in Anfield to say goodbye to the fans and go the Africa cup. I don’t know what is going to happen when I am there.”
Asked if it could be his final game for Liverpool, Salah said: “In football you never know. I don’t accept this situation. I have done so much for this club.”
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