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.
“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:
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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.”
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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7:20
‘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.
At least 10 people have been killed after a vehicle struck a crowd celebrating the New Year in New Orleans.
At least another 35 people have been injured in the incident, which took place on the corner of the popular Bourbon Street, in the French Quarter of the city on Wednesday morning.
The FBI said it was investigating the attack as an “act of terrorism”.
Anne Kirkpatrick, superintendent of the New Orleans Police Department, said the incident started at around 3.15am local time when a man driving a pick-up truck “intentionally” went around barricades and drove down the street at a “very fast pace”.
“He was trying to run over as many people as he could,” she said.
“He was hell-bent on creating the carnage and damage that he did.”
Superintendent Kirkpatrick said the perpetrator also open fired at officers after crashing the vehicle. Two officers were shot, but both are currently in a stable condition in hospital.
The attacker was killed by officers at the scene, police said.
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1:11
Situation in New Orleans ‘very active’
New Orleans city councilman Oliver Thomas added: “We know the perpetrator has been killed. As we search for a motive, remember there is no making sense of evil.”
Mayor LaToya Cantrell described the incident as a “terrorist attack” and said she has been in direct contact with the White House. President Joe Biden has also been briefed on the incident.
FBI special agent Alethea Duncan added that “improvised explosive devices” were found in the area and checks were being carried out to see if the devices were “viable”.
All three officials warned the public to stay away from the Bourbon Street area.
‘Horrific act of violence’
The city’s emergency preparedness campaign, NOLA, managed by New Orleans Homeland Security & Emergency Preparedness, said earlier on Wednesday there had been a “mass casualty incident”.
“The 8th District is currently working a mass casualty incident involving a vehicle that drove into a large crowd on Canal and Bourbon Street,” NOLA said.
“Public safety partners are responding on scene.”
They warned people to “get yourself away from the area”.
Louisiana governor Jeff Landry said he was “praying for all the victims and first responders on scene”.
He called the incident a “horrific act of violence”.
Police said on Tuesday they expected the city to be busy as locals and visitors rang in the new year.
The city was also hours from the annual Allstate Sugar Bowl college American football game, which was set to attract thousands of people.
Officials said to help keep the peace, the police department would be staffed at 100% and it would draft in another 300 officers.
Bourbon Street is a popular tourist area in the city, famous for its many bars and clubs.
Hundreds of grieving relatives of people killed in the fated Jeju Air plane crash visited the site on New Year’s Day to pay respect to their loved ones.
South Korea’s transport ministry said authorities have finished formally identifying the 179 victims of the country’s worst air disaster.
Investigators have also extracted the data from the aircraft’s cockpit voice recorder and will convert it into an audio file, which is hoped will provide an insight into the crucial moments leading up to the tragedy.
The conversion could take about two days, the ministry said.
Officials said the contents of the damaged flight data recorder was not able to be extracted in South Korea, so it will be sent to the United States in cooperation with the US National Transportation Safety Board (NTSB) for analysis.
All 175 passengers and four of six crew members were killed on Sunday when the Boeing 737-800 belly-landed at Muan International Airport in the country’s southwest and slammed into a sand and concrete embankment at the end of the runway, where it burst into flames.
Two crew members, located near the tail of the plane, survived.
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0:56
Sky News reports from the crash site in South Korea
The government has declared a national mourning period until 4 January and the country scaled back New Year’s celebrations.
The transport ministry said two more US officials arrived late on Tuesday to join a team of around two dozen investigators including from the NTSB, Federal Aviation Administration, and aircraft maker Boeing.
“They’re also planning to start a visual investigation into the wreckage,” deputy minister for civil aviation Joo Jong-wan told a briefing.
Many questions remain unanswered and investigators will examine whether a bird strike, a failure of the landing gear to drop, or if problems with any other control systems played a role in the disaster.
Air safety experts have also questioned if the airport embankment designed to prop up navigation equipment was built too close to the end of the runway.
South Korea’s acting President Choi Sang-mok has called for a fair and objective investigation, adding: “The most urgent matter at present is to return the victims to their families.”
Airport authorities set up an altar late on Tuesday, and on Wednesday buses carried relatives of victims to the crash site so they could pay their respects to their lost loved ones.
Park Han-shin, who has been liaising with airport and government authorities on behalf of the bereaved families, said almost 700 family members visited the crash site, where they laid chrysanthemums and bowls of rice cake soup.
County officials have since sent an alert to urge visitors to go instead to a larger memorial set up in a sports complex about five miles from the crash site.
What will 2025 mean for Gaza, Ukraine, trade wars and African tech? Our foreign correspondents set the scene for trends that will shape their region.
From elections in the EU to a bombastic Trump presidency to climate disruption, 2025 is shaping up to be a bumpy year.
But it’s not all bad news…
Immediate, dramatic change promised for the United States by Mark Stone, US correspondent
Never mind the coming year, the coming month could be extremely consequential.
Donald Trump will become America’s 47th president on 20 January – Inauguration Day – and he has pledged immediate, dramatic change.
A year ago, I had lunch with a senior Trump adviser. We pondered a Trump victory.
The adviser projected that a victorious Mr Trump would sign numerous presidential “executive orders” on Inauguration Day.
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With a sweep of the presidential pen on a pile of papers on the balcony of the Capitol building literally moments after he takes the oath of office, Mr Trump would, the adviser predicted, undo as much of Biden’s legacy as possible and set the direction of America for the four years ahead.
Whether he signs orders at that moment or in the days after, Mr Trump has said he will “make heads spin”.
Even before inauguration, Congress will confirm or reject Mr Trump’s administration picks. We’ll discover if controversial choices like Pete Hegseth for defense secretary or Kash Patel to head the FBI make the cut.
Domestically, prepare for radical new immigration policies. The mass deportations he has promised will be subject to legal battles but expect Team Trump to fight hard.
There’ll be mass pardons for those involved in the Jan 6th protests / insurrection / riots – divided Americans choose their descriptor dependent on their politics, and he’ll probably go after those who tried to take him down.
Then, the international ramifications of Trump 2.0: Ukraine, the Middle East, the climate agenda, trade tariffs.
On climate – the expectation is that Trump will (again) withdraw the US from the Paris climate commitments, thus rendering America no longer beholden to carbon emissions reductions targets.
On Ukraine, he has said he could bring peace in 24 hours. We will, finally, see what that looks like and the extent to which it benefits one side or the other.
On the Middle East, Mr Trump has said there will be “all hell to pay” if the hostages are not released from Gaza by the time he takes office. How does that threat play out? No one knows.
There’s a chance that the combination of traits which define Donald Trump – unpredictable, transactional, threatening, spontaneous – will produce outcomes that look attractive at least in the short term; deals that Biden couldn’t get or wouldn’t take.
Brace for a month and a year of huge consequence.
Europe: Big beast elections, while some cosy up to Trump / political turmoil and turnover by Adam Parsons, Europe correspondent
The year will start with both France and Germany, Europe’s two biggest beasts, facing political uncertainty.
The focus will first be on Berlin – Friedrich Merz is likely to end up as Germany’s chancellor, moving his country more to the right.
He, like a growing number of European politicians, will say his priority is controlling migration. The far-right AfD could well ride that same wave to come second.
France’s parliamentary gridlock means the country’s politicians will stumble on in a constant foul mood. Another election looks certain.
Edouard Philippe, who served as French prime minister under Macron, will start positioning himself to replace Emmanuel Macron as president.
Look out for Giorgia Meloni to grow from “just” being Italy’s leader to becoming Europe’s conduit with Donald Trump. Another person on the up is Kaja Kallas, the former Estonian PM who is now head of foreign affairs for the EU.
Tensions between Serbia and Kosovo will remain high, and look out for flashpoints in Moldova and Nagorno-Karabakh. Hungary will cause more diplomatic mischief.
Bulgaria will adopt the Euro, Romania will finally elect a president. Oh, and journeys between the UK and the EU will become clunkier as the new ETIAS travel permit scheme is launched.
The Middle East: anything but predictable by Alistair Bunkall, Middle East correspondent
If the extraordinary events of 2024 taught or reminded us of anything, it was that the Middle East is anything but predictable.
2025 is likely to be a year of consolidation for Israeli PM Benyamin Netanyahu and Israel after the military gains of the past twelve months and unexpected downfall of Bashar al Assad over the border in Syria.
But the hostage situation remains an unresolved and deeply painful situation for Israelis, and time is running out if Donald Trump’s reported demand for a Gaza ceasefire is to be realised before his inauguration on 20 January.
Despite recent optimism around negotiations, differences remain between Hamas and Israel. But a ceasefire remains likely and the best way to release the 100 hostages that remain in captivity.
Any truce will probably be temporary, however, and there is every indication Israeli forces will remain in Gaza for the foreseeable with calls for a permanent occupation growing amongst far-right Israeli politicians.
There is little hope of imminent respite for the Gazan people with no “day-after” plan proposed. And unless the humanitarian situation in Gaza improves dramatically and rapidly, Israel’s international reputation will continue to suffer as the International Court of Justice considers accusations of genocide.
The recent escalation in attacks by the Iranian-backed Houthis in Yemen have caused little material damage to Israel but have created new uncertainty on another front.
Netanyahu is surely tempted to strike a weakened Iran, both to deter the Houthis and degrade the country’s nuclear programme, but might be dissuaded if he doesn’t get support from the incoming US president.
That temptation might become too great however if Tehran attempts to accelerate its nuclear programme as a way of making up for the loss of its ally Assad in Syria and the degradation of Hezbollah in Lebanon.
The elderly Iranian Supreme Leader’s health and authority has been the source of much speculation in recent months so that will be something to keep a close eye on.
Syria’s new leaders will need to stabilise the country and bring together the various religious and militant factions otherwise the euphoric optimism seen after Assad’s overthrowing risks a new civil war.
And finally, both Trump and Netanyahu have expressed their hopes for a Saudi-Israel normalisation deal and it would certainly be a huge boon to the latter as he eyes re-election in 2026.
But as long as the war in Gaza continues, Riyadh is unlikely to gift Bibi that historic agreement, certainly not without considerable concessions for the Palestinian people, which Netanyahu is unlikely to concede.
Trump will challenge China and China will challenge global world order by Nicole Johnston, Asia correspondent in Beijing
The momentum in China-US competition could really pick up the pace next year if Donald Trump puts his trade threats into action.
Before Americans went to the polls, Trump threatened to impose a 60% tariff on all Chinese goods, which could spark a global trade war and economic meltdown.
UK Foreign Secretary David Lammy visited Beijing in 2024 and Chancellor Rachael Reeves is expected to come in January.
In Asia and around the world, the growing power of China remains a major issue. Its influence is reaching deep into “Global South” countries. Many are open to Chinese overtures for trade, tech and diplomatic support.
In the middle of this great global reshaping, China, Russia, North Korea and Iran are challenging the US-led “rules-based” global order.
Keep an eye on how these countries help each other, diplomatically, militarily and economically.
They may have little in common. But they all have a desire to see an alternative to the hegemony of the West.
Fighting in Ukraine will finally cease next year by Ivor Bennett, Moscow correspondent
I predict the war in Ukraine will end in 2025. Or perhaps more accurately: the fighting will stop and the conflict will be frozen.
Both sides have recently indicated a willingness to make concessions in order to achieve a peace agreement.
It’s a dramatic shift in tone, brought about by the election of Donald Trump. Talks and a deal feel inevitable.
Whatever the outcome, Russia will present it as a win.
I think the Kremlin will hope to conclude negotiations before 9 May, which marks the 80th anniversary of the Soviet Union’s victory over Nazi Germany. The aim will be for a double celebration.
But the problems won’t end there for Vladimir Putin. With surging inflation, a sliding rouble and weak productivity, the economy will be the next battle.
In Africa, more protests, more climate disasters and more tech by Yousra Elbagir, Africa correspondent
The year is ending with buildingprotest movements in Mozambique, Angola and Kenya. Crackdowns on anti-government demonstrators have led to deaths that are fuelling further dissent.
The El Nino weather phenomenon drove drought to new levels in southern Africa this year and propelled a cyclone season that started early with the deadly Chido in Mayotte.
Although El Nino dissipated in the summer, many countries will continue to suffer its impacts next year due, including in the form of severe food shortages.
Africa already bears the brunt of climate change, and with the planet getting hotter still, cruelly more extreme weather is on the way to batter homes, health and livelihoods.
Not all news is negative, though.
Tech innovation in Africa is expected to continue as young people find ways to survive and thrive in tough job markets and rising costs of living.