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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 for 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.

Hunt goes further than expected – as Tory MPs say it’s ‘when not if’ Truss goes – follow latest on politics

“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 Treasury said new tax measures would bring in £32bn 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.

‘A new approach’

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.”

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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: reversing the increase in national insurance contributions 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, Angela Richardson, joined those who started publicly calling for her to go over the weekend.

‘Genuinely shocking’

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

‘Still flying blind’

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.

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Tanks gather near Israeli-Lebanon border – as defence minister hold talks over ‘expansion’ of IDF activity

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Tanks gather near Israeli-Lebanon border - as defence minister hold talks over 'expansion' of IDF activity

Israeli defence minister Yoav Gallant has held talks over the possibility of expanding Israel’s military offensive – as tanks were pictured on the country’s border with Lebanon.

In a statement on Saturday, Mr Gallant’s office said he was conducting “an operational situation assessment” regarding what it called “the expansion of IDF (Israel Defence Forces) activities in the northern arena”.

Israeli tanks and troops were later pictured near the border, in what Sky News’ security and defence editor Deborah Haynes said is the “clearest sign yet” that Israel’s conflict with Hezbollah is “about to expand even further”.

The military said it was mobilising three more battalions of reserve soldiers to serve across the country. It had already sent two brigades to northern Israel to prepare for a possible ground invasion.

The deployment comes after Hezbollah confirmed that its leader of more than three decades Hassan Nasrallah was killed in an Israeli airstrike in Beirut on Friday.

Yoav Gallant holds a meeting with senior IDF officers. Pic: Israeli defence ministry
Image:
Yoav Gallant holds a meeting with senior IDF officers. Pic: Israeli defence ministry

The militant group – which is aligned with Iran – vowed to continue its fight against Israel even as attacks continued to bombard areas around Lebanon’s capital.

At least six people were killed in the strikes – not including Nasrallah – and 91 were wounded, according to preliminary figures from Lebanon’s health ministry.

28 September 2024, Israel, ---: Israeli military tanks gather by the Israeli-Lebanon border. Photo by: Ilia Yefimovich/picture-alliance/dpa/AP Images
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Israeli military tanks gather by the Israeli-Lebanon border. Pic: AP

The United Nations high commissioner for refugees said that airstrikes led to the displacement of “well over 200,000” people inside Lebanon.

“More than 50,000 Lebanese people, and Syrians living in Lebanon, have crossed the border into Syria,” Filippo Grande wrote on X on Saturday.

‘Israel is on the move’

In his first public remarks since the killing, Israeli Prime Minister Benjamin Netanyahu described Nasrallah as a “terrorist” and said his killing would help bring displaced Israelis back to their homes in the north and would pressure Hamas to free Israeli hostages held in Gaza.

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Netanyahu: Nasrallah ‘was the terrorist’

But with the threat of retaliation high, he said the coming days would bring “significant challenges” and warned Iran against trying to strike.

“There is no place in Iran or the Middle East that the long arm of Israel will not reach, and today you already know how true this is,” Mr Netanyahu said.

28 September 2024, Israel, ---: Israeli military tanks gather by the Israeli-Lebanon border. Photo by: Ilia Yefimovich/picture-alliance/dpa/AP Images
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Pic: AP

“We have great achievements, but the work is not yet complete. In the coming days we will face significant challenges, and we will face them together,” he added.

“We are determined to continue to strike at our enemies, return our residents to their homes, and return all our abductees. We do not forget them for a moment.

“Israel is on the move.”

Demonstrators chant during an anti-Israel protest following an Israeli strike on Lebanon, in Tehran, Iran, September 28, 2024. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.
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Protesters chant during an anti-Israel demonstration in Tehran. Pic: Majid Asgaripour/WANA

Iranian Supreme Leader Ayatollah Ali Khamenei condemned the killing and announced five days of mourning. He said Lebanon will make Israel “regret their actions” and Nasrallah’s blood “will not go unavenged”.

In a letter to the UN Security Council, Iran’s UN ambassador Amir Saeid Iravani asked for an “emergency meeting” of the 15-member body, calling on it to “compel Israel” to cease all military action in both Gaza and Lebanon and “comply with relevant UNSC resolutions”.

Read more:
Is wider war in the Middle East now inevitable?
Hezbollah and Iran must now decide to fight or back down

Demonstrators chant during an anti-Israel protest following an Israeli strike on Lebanon, in Tehran, Iran, September 28, 2024. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.
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Pic: Majid Asgaripour/WANA

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Meanwhile, hundreds of protesters took to the streets of Tehran, waving Hezbollah flags and chanting “death to Israel” and “death to Netanyahu the murderer”.

People also gathered in the Lebanese city of Sidon and in Amman, Jordan, to mourn Nasrallah. The 64-year-old had countless followers across the Arab and Islamic world, but was viewed as an extremist in much of the West.

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Is wider war in the Middle East now inevitable?

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Is wider war in the Middle East now inevitable?

The pictures from Beirut are unnerving to say the least, the predictions for the immediate future even more so.

With the dust still settling from this game-changing assassination of Hassan Nasrallah, there are pressing questions crying out for answers.

Most of all, is the Middle East about to erupt into a regional conflict that threatens us all? That’s been the warning for almost a year, so is it about to happen?

Not if America and its allies can help it.

Follow latest: Iran warns Israel will ‘regret their actions’

Hezbollah is a designated terrorist organisation for the US, UK and other Western nations. It has killed hundreds of their citizens over the years.

There is no doubt President Joe Biden has felt what he called a “measure of justice” that Nasrallah has been killed.

More on Hezbollah

But there is also a fear of what comes next. From the president down we are hearing urgent calls for de-escalation and a diplomatic solution. And the US has rushed military assets to ward off Hezbollah’s patrons in Iran doing their worst. But will that be enough?

Pic: Stringer/picture-alliance/dpa/AP
27 September 2024, Lebanon, Shebaa: Lebanese Red cross workers inspect a destroyed three storey building, after it collapsed following an Israeli air raid in the southern Lebanese border village of Shebaa. Photo by: Stringer/picture-alliance/dpa/AP Images
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Lebanese Red Cross workers inspect a destroyed building. Pic: AP

US-led diplomacy to contain the Middle East crisis has failed.

A senior Middle Eastern diplomat told Sky News the assassination is a kick in the teeth for the US president.

“For all the bombs and billions he has given the Israelis,” he said, “the least they could have done for him in the last weeks of his presidency was a ceasefire in the region”.

With diplomacy stalled, what happens next depends on both Iran and Israel.

For its part, Iran may feel it has no alternative but to weigh in. It may fear the massive missile arsenal it supplied is so jeopardised it must intervene and save Hezbollah.

Pic: AP
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Smoke rises as a building collapses in Beirut’s southern suburbs. Pic: AP

Iranians have long regarded Hezbollah as an insurance policy for the day Israel might attack Iran itself. If it sees its ally close to total collapse, might it then weigh in?

If it does, Israel’s allies led by America might feel compelled to come to its defence. The full scale war feared for almost a year could engulf the region.

But there are good reasons for Iran not to rush to action.

The Middle East seems a dangerous and unpredictable place but certain rules and assumptions apply, even in all its chaos.

For all their fanaticism, the ayatollahs of Tehran are pragmatic and seek the preservation of their grip on power above all. That has been a rule of the Middle Eastern jungle since they seized power 45 years ago.

Is it pragmatic or wise to up the ante and more directly support Hezbollah, when it is at its weakest? The Iranian regime is not that strong either, crippled economically by sanctions and mismanagement, and socially and politically by months of civil unrest, albeit now quashed.

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There are limits too to what Iran could achieve with direct military intervention anyway in a war that is 2,000km from its borders. The Iranians may conclude this round in the war against Israel is over. They think in long time spans, after all. Time to regroup and move on to fight another day?

There will no doubt be days more of sound and fury, like we have seldom seen before. The mourning and funerals of Nasrallah and his lieutenants are likely to be the focus of intense anger and will raise tensions. But what happens afterwards?

That also comes down to Israel.

People stand next to Israeli Army tanks, amid cross-border hostilities between Hezbollah and Israel, in northern Israel, September 27, 2024. REUTERS/Jim Urquhart
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People stand next to IDF tanks in northern Israel. Pic: Reuters

It may now feel it has the wind in its sails and seize the moment to invade Lebanon on the ground to push Hezbollah back from the border. That would be an extremely dangerous moment too, potentially drawing in supportive militia and Iranian forces based in Syria.

The hills of southern Lebanon are a treacherous country for a military like Israel’s that relies on infantry and tanks. They could be drawn into a lengthy and punishing campaign that could then destabilise the region.

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What does Nasrallah’s death mean for Hezbollah?

Read more:
Analysis: Hezbollah and Iran must decide to fight or back down
Who was Hassan Nasrallah?

Then there is Lebanon itself. An uneasy compromise between the warring factions of its civil war in the 1970s and 80s has held for decades but its always fragile status quo is now threatened. The chessboard of its multi-denominational politics has potentially been upended by the removal of its most powerful player.

If Lebanon descends back into factional fighting, regional stability will be undermined too.

The Middle East is in grave danger of further escalation. Western and regional diplomats are working round the clock to pull it back from the brink but recent efforts have all ended in failure and neither Israel nor Hezbollah seem to be listening.

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Hezbollah leader Hassan Nasrallah killed after Beirut airstrikes, Israeli army says

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Hezbollah leader Hassan Nasrallah killed after Beirut airstrikes, Israeli army says

Hezbollah leader Hassan Nasrallah has been killed after airstrikes in Beirut, the Israeli army has said.

Recent weeks have seen Israel unleash a barrage of strikes against Lebanon after it turned its attention to the conflict at its northern border.

On Friday, Israel targeted the capital Beirut with a series of attacks claiming to have struck the headquarters of Hezbollah.

Israel-Hezbollah latest

People stand near a picture of Hezbollah leader Sayyed Hassan Nasrallah during the funeral of Hezbollah member Ali Mohamed Chalbi, after hand-held radios and pagers used by Hezbollah detonated across Lebanon, in Kfar Melki, Lebanon September 19, 2024. REUTERS/Aziz Taher
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People stand near a picture of Nasrallah during the funeral of a Hezbollah member. Pic: Reuters

People watch Lebanon's Hezbollah leader Sayyed Hassan Nasrallah delivering a televised address, as they sit at a cafe in Beirut, Lebanon September 19, 2024. REUTERS/Mohamed Azakir
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People watch Hassan Nasrallah delivering a televised address in Beirut. Pic: Reuters

The Israel Defence Forces (IDF) said it carried out a “precise strike” on Hezbollah’s “central headquarters”, which it claimed was “embedded under residential buildings in the heart of the Dahieh in Beirut”.

The first wave of attacks shook windows across the city and sent thick clouds of smoke billowing into the air.

Smoke rises from Israeli airstrikes in Beirut's southern suburbs. Pic: AP
Image:
Smoke rises from Israeli airstrikes in Beirut’s southern suburbs. Pic: AP

While Israel stressed it had been a “precise” strike, preliminary figures from Lebanon’s health ministry confirmed at least six other people were killed and 91 were wounded.

Israel said Nasrallah was the intended target and initially there were claims he had survived.

However, after several hours of confusion, his death was confirmed by Israel.

“Hassan Nasrallah will no longer be able to terrorise the world,” the IDF said.

Hours later, a defiant Hezbollah confirmed Nasrallah’s death but vowed their fight with Israel would continue after confirming they had fired upon sites in northern Israel.

“The leadership of Hezbollah pledges to the highest, holiest, and most precious martyr in our path full of sacrifices and martyrs to continue its jihad in confronting the enemy, supporting Gaza and Palestine, and defending Lebanon and its steadfast and honourable people,” they said.

Recent days have seen Israel launch strikes in Lebanon in Beirut, the Bekaa Valley, and Bhamdoun
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Recent days have seen Israel launch strikes in Beirut, the Bekaa Valley, and Bhamdoun

datawrapper map of Beirut showing the suburb of Dahieh
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The Israeli strike that allegedly took Nasrallah’s life was on residential buildings in Dahieh, Beirut

Alongside claiming to have killed Nasrallah, the IDF said it had killed a number of other commanders, including Ali Karaki, the commander of the southern front.

The country’s military said the strike was carried out while Hezbollah leadership met at their underground headquarters in Dahieh.

In the aftermath of the most recent attacks, an Israeli military spokesperson declined to comment on whether US-made Mark 84 heavy bombs were used in the strike against Nasrallah.

“The strike was conducted while Hezbollah’s senior chain of command were operating from the headquarters and advancing terrorist activities against the citizens of the State of Israel,” Lieutenant Colonel Nadav Shoshani said in a media briefing.

He continued: “We hope this will change Hezbollah’s actions.”

Read more from Sky News
Did Israel sabotage the best chance of ending the war?
Starmer and Netanyahu fail to meet

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Hezbollah leader killed says IDF

He added the number of civilian casualties was unclear but blamed Hezbollah for positioning itself in residential areas.

“We’ve seen Hezbollah carry out attacks against us for a year. It’s safe to assume that they are going to continue carrying out their attacks against us or try to,” he said.

Meanwhile, Iran said it was in constant contact with Hezbollah and other allies to determine its “next step”, but Reuters reported the country’s supreme leader was transferred to a secure location in light of the latest attack.

Speaking after the attack, Ayatollah Ali Khamenei called on Muslims “to stand by the people of Lebanon and the proud Hezbollah” and said: “The fate of this region will be determined by the forces of resistance, with Hezbollah at the forefront,” state media reported.

Nasrallah’s death will be a blow to Hezbollah as it continues to reel from a campaign of escalating Israeli attacks.

Flames rise after an Israeli airstrike in the southern suburbs of Beirut this morning. Pic: AP
Image:
Flames rise after an Israeli airstrike in the southern suburbs of Beirut on Saturday. Pic: AP

Nasrallah is latest Hezbollah leader to fall

While Nasrallah’s death is certainly the most high-profile of recent attacks, it continues a trend of Israel targeting Hezbollah’s leadership structure.

Also on Saturday, in the early hours of the morning, the commander of the group’s missile unit and his deputy were killed in another Israeli attack in southern Lebanon.

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Then, in a separate strike overnight on Friday, the IDF said it killed the head of Hamas’s network in southern Syria.

This followed the deaths of other senior commanders, including Muhammad Qabisi, earlier in the month.

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