Jeremy Hunt 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 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:
- 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.
World
UK joins NATO operation to bolster Europe’s eastern flank after Russian drone incursions into Poland
NATO is to bolster Europe’s eastern flank, including the use of UK military resources, after Russia’s “reckless and unacceptable” violation of Polish airspace.
NATO Secretary-General Mark Rutte announced operation ‘Eastern Sentry’ on Friday, involving the deployment of equipment on the border with Belarus, Russia and Ukraine to deter potential Russian aggression.
Poland shot down Russian drones which flew over the country on Wednesday, something the military alliance has portrayed as an attempt by Moscow to test NATO’s military response.
It underlines long-held concerns about the potential expansion of Russia’s three-year war in Ukraine.
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Michael Clarke: Russia looking to frighten NATO
Russia said its drones went astray because they were jammed, but European leaders believe the incursions were a deliberate provocation by Russia.
“It’s reckless and unacceptable. We can’t have Russian drones entering allied airspace,” Mr Rutte told a news conference.
Mark Rutte described Russian drones entering Polish airspace as ‘reckless’. Pic: Reuters
He added that allies, including the UK, France, Germany and Denmark, have so far committed to the mission with others set to join.
In a statement, the UK’s Ministry of Defence said: “The UK is fully committed to playing our part in NATO’s Eastern Sentry following the reckless and dangerous airspace violations by Russia”. It added that the details of the UK’s contribution would be announced soon.
Yvette Cooper visited Ukraine on Friday, her first visit to the country since becoming foreign secretary after a cabinet shake-up by Sir Keir Starmer.
Ms Cooper described her trip, which included a meeting with the country’s president, Volodymyr Zelenskyy, as a demonstration of solidarity with Ukraine.
“The UK will not stand idly by as Putin continues his barbaric invasion of Ukraine,” Ms Cooper said, noting what she said was the Russian president’s “complete disregard for sovereignty” by sending drones into NATO airspace.
Yvette Cooper met Volodymyr Zelenskyy in Kyiv on Friday. Pic: Valentyn Ogirenko/Reuters
Pic: Valentyn Ogirenko/Reuters
Prince Harry also made a surprise visit to Kyiv on Friday, where he met with wounded service members.
NATO already has substantial forces in eastern Europe, including thousands of troops, but the alliance did not explain how many additional forces would be involved in the new operation.
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Prince Harry’s surprise visit to Ukraine
Speaking at the alliance’s Brussels headquarters, US General Alexus Grynkewich told reporters the additional resources will enable the alliance to “plug gaps in the line” and concentrate forces wherever they’re needed while improving communications across NATO’s entire eastern flank.
NATO detailed a modest number of additional military assets – including two F-16 fighter jets and a frigate from Denmark, three Rafale fighter jets from France and four Eurofighter jets from Germany.
The announcement also coincided with a joint military exercise involving thousands of Russian and Belarusian troops, which began on Friday.
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Meanwhile, new measures were announced by the UK against Russia on Friday.
They included bans on 70 vessels the UK says are part of Russia’s “shadow fleet” that transports Russian oil in defiance of sanctions.
Some 30 individuals and companies – including Chinese and Turkey-based firms – were also sanctioned for their part in supplying Russia with electronics, chemicals, explosives and other weapons components.
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Donald Tusk, the Polish prime minister, dismissed Donald Trump’s suggestion that the drone incursion into Poland may have been “a mistake”.
“We would also wish that the drone attack on Poland was a mistake,” Mr Tusk wrote on X. “But it wasn’t. And we know it.”
US-led efforts to steer Moscow and Kyiv toward a peace settlement have so far failed to progress.
Kremlin spokesperson Dmitry Peskov said talks to end the war were currently on “pause” even though channels of communication remain open.
Thousands of troops are taking part in a joint military exercise between Russia and Belarus, as tensions with the EU run high following a Russian drone incursion into Polish airspace earlier this week.
The Zapad joint military exercise which began on Friday will involve drills in both Russia and Belarus as well as in the Baltic and Barents seas, the Russian defence ministry said.
Belarusian defence officials initially said about 13,000 troops would participate in the drill, but in May, its defence ministry said that would be cut nearly in half.
It comes just two days after Poland, with support from its NATO allies, shot down Russian drones over its airspace.
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Poland’s Prime Minister Donald Tusk on Friday morning hit back at a suggestion by US President Donald Trump on Thursday that the incursion may have been a “mistake”.
He said in a post on X: “We would also wish that the drone attack on Poland was a mistake. But it wasn’t. And we know it.”
Russia said its forces had been attacking Ukraine at the time of the incursions and that it had not intended to hit any targets in Poland.
Friday also saw Foreign Secretary Yvette Cooper travelling to Ukraine’s capital of Kyiv on the same day the UK announced fresh sanctions against Moscow.
Prince Harry was also in Kyiv for a surprise visit to help with the recovery of military personnel seriously injured in the three-year war with Russia.
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Prince Harry arrives in Kyiv
Ms Cooper, who was appointed foreign secretary last week, posted about her visit on X saying: “The UK’s support for Ukraine is steadfast. I am pleased to be in Kyiv on my first visit as Foreign Secretary.”
The UK’s new sanctions include bans on 70 vessels that Britain says are part of Russia’s “shadow fleet” that transports Russian oil in defiance of sanctions already in place.
Yvette Cooper with Volodymyr Zelenskyy in Kyiv. Pic: Valentyn Ogirenko/PA
Some 30 individuals and companies – including Chinese and Turkey-based firms – have also been sanctioned for their part in supplying Russia with electronics, chemicals, explosives and other weapons components.
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Meanwhile on the frontline, Ukrainian drones struck Russia’s oil-loading Primorsk port overnight, an SBU official said.
The attack caused fires and suspended oil-loading operations, the official added.
Russian defence systems also intercepted and destroyed 221 Ukrainian drones overnight.
Prince Harry has made a surprise visit to the Ukrainian capital of Kyiv, a spokesperson for the royal has said.
Harry, who served 10 years in the British Army, visited the city at the invitation of the Ukrainian government.
The Duke of Sussex travelled to the capital to help with the recovery of military personnel seriously injured in the three-year war with Russia.
Pic: Railway of Ukraine Ukrzaliznytsia/AP
Foreign Secretary Yvette Cooper will also be travelling to Kyiv on Friday in what will be her first foreign trip since being appointed to the job last week.
Her visit coincides with the UK launching a new package of Russia-related sanctions targeting ships carrying Russian oil as well as companies and individuals supplying electronics, chemicals and explosives used to make Russian weapons.
It comes as Russia and Belarus began a major joint military exercise on on NATO’s doorstep on Friday, just two days after Poland, with support from its NATO allies, shot down suspected Russian drones over its airspace.
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Drones shot down in Poland
The Zapad-2025 exercise – a show of force by Russia and its close ally – will involve drills in both countries and in the Baltic and Barents seas, the Russian defence ministry said.
Meanwhile on the frontline, Russian defence systems intercepted and destroyed 221 Ukrainian drones overnight,
including nine over the Moscow region, the ministry said on Friday.
The duke told the Guardian while on an overnight train to Kyiv: “We cannot stop the war but what we can do is do everything we can to help the recovery process.
“We can continue to humanise the people involved in this war and what they are going through.
“We have to keep it in the forefront of people’s minds. I hope this trip will help to bring it home to people because it’s easy to become desensitised to what has been going on.”
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Harry, who served two tours in Afghanistan, previously travelled to Ukraine in April, when he visited war victims as part of his work with wounded veterans.
The prince visited the Superhumans Center, an orthopaedic clinic in Lviv that treats and rehabilitates wounded military personnel and civilians.
Earlier this week, Harry said the King is “great” after he reunited with him at Clarence House for a private tea.
It was their first meeting in 19 months and lasted just 54 minutes.
The last time the father and son saw each other was in February 2024 when the prince flew to the UK after the monarch announced his cancer diagnosis.
Harry and his wife Meghan Markle have lived in California since they quit roles as senior working royals in March 2020.
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