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.”
Please use Chrome browser for a more accessible video player
‘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.
Glasgow has been a city crying out for solutions to a devastating drugs epidemic that is ravaging people hooked on deadly narcotics.
We have spent time with vulnerable addicts in recent months and witnessed first-hand the dirty, dangerous street corners and back alleys where they would inject their £10 heroin hit, not knowing – or, in many cases, not caring – whether that would be the moment they die.
“Dying would be better than this life,” one man told me.
It was a grim insight into the daily reality of life in the capital of Europe’s drug death crisis.
Scotland has a stubborn addiction to substances spanning generations. Politicians of all persuasions have failed to properly get a grip of the emergency.
But there is a new concept in town.
From Monday, a taxpayer-funded unit is allowing addicts to bring their own heroin and cocaine and inject it while NHS medical teams supervise.
It may be a UK-first but it is a regular feature in some other major European cities that have claimed high success rates in saving lives.
Glasgow has looked on with envy at these other models.
One supermarket car park less than a hundred metres from this new facility is a perfect illustration of the problem. An area littered with dirty needles and paraphernalia. A minefield where one wrong step risks contracting a nasty disease.
Drugs paraphernalia in a supermarket car park in Glasgow, near the new facility
It is estimated hundreds of users inject heroin in public places in Glasgow every week. HIV has been rife.
The new building, which will be open from 9am until 9pm 365 days a year, includes bays where clean needles are provided as part of a persuasive tactic to lure addicts indoors in a controlled environment.
There is a welcome area where people will check in before being invited into one of eight bays. The room is clinical, covered in mirrors, with a row of small medical bins.
Clean needles are provided to lure addicts to inject in a controlled environment
There are eight bays users can inject in
We were shown the aftercare area where users will relax after their hit in the company of housing and social workers.
The idea is controversial and not cheap – £2.3m has been ring-fenced every year.
The aftercare area
Read more: ‘Dying would be better than my £1,000 a month heroin addiction’
Authorities in the city first floated a ‘safer drug consumption room’ in 2016. It failed to get off the ground as the UK Home Office under the Conservatives said they would not allow people to break the law to feed habits.
The usual wrangle between Edinburgh and London continued for years with Downing Street suggesting Scotland could, if it wanted, use its discretion to allow these injecting rooms to go ahead.
Click to subscribe to the Sky News Daily wherever you get your podcasts
The stalemate ended when Scotland’s most senior prosecutor issued a landmark decision that it would not be in the public interest to arrest those using such a facility.
One expert has told me this new concept is unlikely to lead to an overall reduction in deaths across Scotland. Another described it as an expensive vanity project. Supporters clearly disagree.
The question is what does success look like?
The big test will be if there is a spike in crime around the building and how it will work alongside law enforcement given drug dealers know exactly where to find their clients now.
It is not disputed this is a radical approach – and other cities across Britain will be watching closely.
Temperatures in northern parts of the UK could fall as low as minus 20C on Friday night as wintry weather continues, the Met Office has said.
There are yellow warnings for ice on Friday morning covering the eastern coast of England and Scotland, the South West, Wales and Northern Ireland.
There is also a yellow warning for snow and ice for northern Scotland. All the warnings expire before midday.
In addition, freezing fog is predicted across central and southeast England, and in parts of Wales, which may be “quite stubborn to clear” on Friday morning, said Met Office meteorologist Liam Eslick.
“It’s going to be another cold couple of days,” he added, and all areas of the UK are likely to experience sub-zero temperatures.
St Andrew’s church at Kiln Pit in Durham. Pic: PA
Friday night may bring the coldest temperatures of the current cold snap, with temperatures possibly plummeting as low as minus 15C or even minus 20C.
“That’s probably the lowest limits we’re expecting,” Mr Eslick said.
“We probably don’t really expect many places to get close to minus 20C, but we could see one or two places that could just touch that mark overnight Friday into Saturday.”
That is because of still conditions, high pressure, “not a lot of wind and clear skies”.
In addition, snow on the ground helps to create “sort of a perfect scenario to see those temperatures just plummet”, Mr Eslick added.
Saturday is also likely to be bitterly cold, while Sunday is forecast to be a little warmer.
On Monday, temperatures are expected to be more in line with the seasonal norm, at about seven or eight degrees Celcius.
A woman feeds ducks in a frosty High Wycombe. Pic: PA
Read more:
Ticket re-sales could be capped under crackdown on touts
First taxpayer-funded injection room to tackle drugs epidemic
The freezing conditions have led to travel disruption, with Manchester Airport closing both its runways on Thursday morning because of “significant levels of snow”. They were later reopened.
Transport for Wales closed some railway lines because of damage to tracks.
Hundreds of schools in Scotland and about 90 in Wales were shut on Thursday.
Meanwhile, staff and customers at a pub thought to be Britain’s highest were finally able to leave on Thursday after being snowed in.
The Tan Hill Inn in Richmond, North Yorkshire, is 1,732 feet (528m) above sea level.
Six staff and 23 visitors were stuck, the pub said on Facebook.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports9 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway