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The new chancellor Jeremy Hunt has said there “were mistakes” in Liz Truss and Kwasi Kwarteng’s mini-budget.

Speaking to Sky News on Saturday, Mr Hunt said: “It was a mistake when we were going to be asking for difficult decisions across the board on tax and spending to cut the rate of tax paid by the very wealthiest.”

Hunt warns of ‘difficult decisions’ – follow politics latest

He added that it was an error to “fly blind” by not accompanying the ‘fiscal event’ with an economic forecast by the Office for Budget Responsibility, which many argue sent the financial markets into turmoil.

On tax cuts, he said: “We won’t have the speed of tax cuts we were hoping for and some taxes will go up.”

Asked if this would mean a return to austerity, he replied: “I don’t think we’re talking about austerity in the way we had it in 2010. But we’re going to have to take tough decisions on both spending and tax.”

The comments signal a plan to up-end the prime minister’s entire economic strategy, in an extraordinary rebuke of the pledges that brought her into office.

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Mr Hunt was appointed chancellor on Friday, an hour after his predecessor Kwasi Kwarteng was sacked after just 38 days in the job.

While his appointment was welcomed by some Tory MPs as “an experienced pair of hands”, others questioned why Mr Kwarteng was the one who had to go when he was pursuing policies Ms Truss espoused in her leadership campaign.

At a hastily-arranged news conference in Downing Street on Friday, the prime minister dismissed calls for her resignation, saying she was “absolutely determined to see through what I have promised”.

But announcing another U-turn, she said: “It is clear that parts of our mini-budget went further and faster than markets were expecting, so the way we are delivering our mission right now has to change.”

Mr Kwarteng’s plans to drop the planned rise in corporation tax from 19% to 25%, were therefore being scrapped, she announced, saving the Exchequer £18bn a year.

Is Jeremy Hunt now more powerful than the PM?


Rob Powell Political reporter

Rob Powell

Political correspondent

@robpowellnews

Jeremy Hunt has confirmed that Prime Minister Liz Truss’s economic vision is not only dead, but that the immediate actions of this administration will be to do almost exactly the opposite of what the prime minister promised during the summer leadership campaign.

This was a cold, hard reality check from a chancellor who is being upfront about the fact that his primary purpose is to put out the fires started by the government he’s just joined and restore some semblance of credibility to the UK economy.

Some taxes will rise, some will be cut more slowly than expected, and public spending will be trimmed with every department asked to find savings.

Does this mean pushing back the 2023 cut to the basic rate of income tax? Can the Ministry of Defence still expect its funding increase? Is there any chance of public sector pay rises reaching anywhere near inflation?

Politically, there is an argument to be made that Jeremy Hunt is now more powerful than the prime minister.

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‘The last few weeks have been very tough’

Asked why he agreed to take on the difficult job of sorting out the public finances, the new chancellor said he wants to “do the right thing by the British people”.

But he added: “I want to be honest with people, we have some very difficult decisions ahead.

“The last few weeks have been very tough, but the context of that is coming out of a pandemic and a cost-of-living crisis.

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Jeremy Hunt is arguably now more powerful than prime minister Liz Truss

“No chancellor can control the markets, but what I can do is show that we can pay for our tax and spending plans and that is going to need some very difficult decisions.”

He said that all government departments would have to “find more efficiencies than they were planning to find”.

However, he declined to give any specific commitments ahead of the fiscal statement on October 31.

Asked if the NHS will still get the money that was promised in the health and social care levy, he said “the government’s already made that commitment”.

He added: “I’m not going to make any specific commitments about specific departments now, or indeed on the tax side about specific taxes because we have to look at these things in the round. And we have to make sure as we take these very difficult decisions, we’re honest with people about the situation we face.”

‘This is a disaster’

David Lammy, the shadow foreign secretary, questioned how cuts can be made given the pressure public services are under.

He said the market turmoil seen in recent weeks is a “crisis made in Number 10” and called for a general election.

He said: “As you listen to Jeremy Hunt what you hear is despite long queues in the NHS, it’s now set to get worse, despite rising class sizes in Britain we can expect our education to get worse, and with crime soaring across many communities in the country, we need police officers.

“Are they are now going to back-pedal on those undertakings that they’ve previously made?

“This is a disaster and the only way to deal with a disaster is a general election and to set our country on a certain path for the next five years.”

He claimed Ms Truss had “no mandate” for her policies.

We cannot live in an oligarchy effectively where the Conservatives choose who leads them and as a consequence gives us a prime minister with no mandate at all to make, now, the swingeing cuts that we’re about to see.”

Mr Hunt’s comments may only add to the sense among some Tory MPs that Ms Truss is increasingly powerless in Downing Street.

Will Walden, Boris Johnson’s director of communications when he was mayor of London, called Mr Hunt an effective “caretaker prime minister”, while former Conservative leader Lord Hague warned Ms Truss’s premiership “hangs by a thread”.

Heated messages shared in Conservative Party WhatsApp groups after Ms Truss’s hastily-arranged Downing Street press conference show the party is divided about the next steps, with some MPs calling for the PM to be replaced by Rishi Sunak or Penny Mordaunt.

To register your interest and share your story, please email TheGreatDebate@sky.uk

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Russian spy ship on edge of UK waters, warns defence secretary

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Russian spy ship on edge of UK waters, warns defence secretary

A Russian spy ship is currently on the edge of UK waters, the defence secretary has announced.

John Healey said it was the second time that the ship, the Yantar, had been deployed to UK waters.

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Giving a news conference in Downing Street, he said: “A Russian spy ship, the Yantar, is on the edge of UK waters north of Scotland, having entered the UK’s wider waters over the last few weeks.

“This is a vessel designed for gathering intelligence and mapping our undersea cables.

“We deployed a Royal Navy frigate and RAF planes to monitor and track this vessel’s every move, during which the Yantar directed lasers at our pilots.

“That Russian action is deeply dangerous, and this is the second time this year that this ship, the Yantar, has deployed to UK waters.”

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Mr Healey added: “So my message to Russia and to Putin is this: we see you, we know what you’re doing, and if the Yantar travels south this week, we are ready.”

His warning comes following a report from MPs that the UK lacks a plan to defend itself from a military attack, despite the government promising to boost readiness with new arms factories.

At least 13 sites across the UK have been identified for new factories to make munitions and military explosives, with Mr Healey expecting the arms industry to break ground at the first plant next year.

The report, by the Commons Defence Committee, said the UK “lacks a plan for defending the homeland and overseas territories” as it urged the government to launch a “co-ordinated effort to communicate with the public on the level of threat we face”.

Mr Healey acknowledged the dangers facing the UK, saying the country was in a “new era of threat” that “demands a new era for defence”.

Giving more details on the vessel, he said it was “part of a Russian fleet designed to put and hold our undersea infrastructure and those of our allies at risk”.

Russian Ship Yantar. Pic: Ministry of Defence
Image:
Russian Ship Yantar. Pic: Ministry of Defence

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He said the Yantar wasn’t just part of a naval operation but part of a Russian programme driven by Moscow’s Main Directorate of Deep-Sea Research, or GUGI, which is “designed to have capabilities which can undertake surveillance in peacetime and sabotage in conflict”.

“That is why we’ve been determined, whenever the Yantar comes into British wider waters, we track it, we deter it and we say to Putin we are ready, and we do that alongside allies,” he added.

Asked by Sky News’ political correspondent Rob Powell whether this was the first time that lasers had been used by a Russian vessel against pilots, Mr Healey replied: “This is the first time we’ve had this action from Yantar directed against the British RAF.

“We take it extremely seriously. I’ve changed the Navy’s rules of engagement so that we can follow more closely, monitor more closely, the activities of the Yantar when it’s in our wider waters. We have military options ready.”

Mr Healey added that the last time the Yantar was in UK waters, the British military surfaced a nuclear-powered attack submarine close to the ship “that they did not know was there”.

The Russian embassy has been contacted for comment.

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South Korea: All 267 passengers and crew rescued from ferry that ran aground, says coastguard

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South Korea: All 267 passengers and crew rescued from ferry that ran aground, says coastguard

More than 250 passengers on board a ferry that ran aground off the South Korean coast have been rescued, according to the coastguard.

It said the Queen Jenuvia 2, travelling from the southern island of Jeju to the southwestern port city of Mokpo, hit rocks near Jindo, off the country’s southwest coast, late on Wednesday.

A total of 267 people were on board, including 246 passengers and 21 crew. Three people had minor injuries.

All on board were rescued. Pic: Yonhap/Reuters
Image:
All on board were rescued. Pic: Yonhap/Reuters

Footage showed passengers wearing life vests waiting to be picked up by rescue boats, which were approaching the 26,000-tonne South Korean ferry.

Its bow seemed to have become stuck on the edge of a small island, but it appeared to be upright and the passengers seemed calm.

Weather conditions at the scene were reported to be fair with light winds.

South Korea’s Prime Minister Kim Min-seok ordered all available boats and equipment to be used to rescue those on board, his office said.

More on South Korea

The coastguard received a report of the incident late on Wednesday, and immediately deployed 20 vessels and a plane to join the rescue effort.

It was not immediately clear what caused the vessel to run aground.

The vessel can carry up to 1,010 passengers and has multiple lower decks for large vehicles and passenger vehicles, according to its operator Seaworld Ferry.

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In 2014, more than 300 people, mostly schoolchildren heading to Jeju on a school trip, died when the Sewol ferry sank.

It was one of the country’s worst disasters.

The ship went down 11 years ago near the site of Wednesday’s incident, though further off Jindo.

After taking a turn too fast, the overloaded and illegally-modified ferry began listing.

It then lay on its side as passengers waited for rescue, which was slow to come, before sinking as the country watched on live television.

Many of the victims were found in their cabins, where they had been told to wait by the crew while the captain and some crew members were taken aboard the first coastguard vessels to arrive at the scene.

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A Bond-villain ship prowling our waters: Why the Yantar alarms the West

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A Bond-villain ship prowling our waters: Why the Yantar alarms the West

The Yantar may look scruffy and unthreatening but below the surface it’s the kind of ship a Bond villain would be proud of.

In hangars below decks lurk submersibles straight out of the Bond film Thunderball. Two Consul Class mini manned subs are on board and a number of remotely operated ones.

It can “undertake surveillance in peacetime and sabotage in conflict”, in the words of Britain’s Defence Secretary John Healey.

The Russian spy ship Yantar. Pic: MOD/PA
Image:
The Russian spy ship Yantar. Pic: MOD/PA

Cable-cutting equipment combined with surveillance and intelligence gathering capabilities make this a vessel to be reckoned with.

Most worryingly though, in its most recent tangle with RAF planes sent to stalk it, the Yantar deployed a laser to distract and dazzle the British pilot.

Matthew Savill, from the Royal United Services Institute, told Sky News this was potentially a worrying hostile act.

He said: “If this had been used to dazzle the pilot and that aircraft had subsequently crashed, then maybe the case could be made that not only was it hostile but it was fundamentally an armed attack because it had the same impact as if they’d used a weapon.”

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The Yantar is off our waters and here to threaten the West’s Achilles heel, says our government. Undersea infrastructure is essential to our hyper-connected world.

Undersea cables are the vital nervous system of Western civilisation. Through them courses the data that powers our 21st century economies and communications systems.

Pipelines are equally important in supplying fuel and gas that are vital to our prosperity. But they stretch for mile after mile along the seabed, exposed and all but undefended.

Their vulnerability is enough to keep Western economists and security officials awake at night, and Russia is well aware of that strategic weakness.

The Russian spy ship Yantar. Pic: MOD/PA
Image:
The Russian spy ship Yantar. Pic: MOD/PA

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That is why some of the most sophisticated kit the Russian military possesses is geared towards mapping and potentially threatening them.

The Yantar’s concealed capabilities are currently being used to map that underwater network of cables and pipelines, it’s thought, but they could in the future be used to sabotage them. Russia has been blamed for mysterious underwater attacks in the recent past.

A more kinetic conflict striking at the West’s soft underwater underbelly could have a disastrous impact. Enough damage to internet cables could play havoc with Western economies.

It is a scenario security experts believe the West is not well enough prepared for.

Putting the Yantar and its Russian overseers on watch is one thing; preventing them from readying for such a doomsday outcome in time of war is quite another.

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