Jeremy Hunt warns of making ‘difficult decisions’ on spending and tax – as he admits government went ‘too far, too fast’
Jeremy Hunt has admitted the government went “too far, too fast” and that he will have to take some “very difficult decisions” on spending and tax to get the economy back up and running.
Earlier, the new chancellor admitted there “were mistakes” in Liz Truss and Kwasi Kwarteng’s mini-budget in an interview with Sky News.
But in an apparent bid to restore trust in the government’s handling of the economy, Mr Hunt released a statement on Saturday night saying his focus is on “growth underpinned by stability”.
“The drive on growing the economy is right – it means more people can get good jobs, new businesses can thrive and we can secure world-class public services. But we went too far, too fast,” he said.
He appeared to warn the public that the road ahead will not be easy, saying the government has to “be honest with people”.
“We are going to have to take some very difficult decisions both on spending and on tax to get debt falling but the top of our minds when making these decisions will be how to protect and help struggling families, businesses and people,” he said.
“I will set out clear and robust plans to make sure government spending is as efficient as possible, ensure taxpayer money is well spent and that we have rigorous control over our public finances.”
Mr Hunt was appointed as the new chancellor on Friday, following Mr Kwarteng’s sacking after just 38 days in the job.
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Hunt: There were mistakes
While some Tory MPs welcomed the new appointment 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.
Meanwhile, the Sunday Times is reporting that Mr Hunt will delay a planned 1p reduction to the basic rate of income tax by one year after the country’s fiscal watchdog warned that the public finances were in a worse state than expected.
Soaring interest rates
It comes as the Bank of England (BoE) said interest rates will have to be raised higher than initially hoped in the face of inflationary pressure.
In August, the bank said it expected the rate of inflation to peak at 13% this year – and remain above 10% for a few months before falling.
But now, BoE governor Andrew Bailey says the realities of inflation might require a stronger interest rates response from the central bank.
Jeremy Hunt and Andrew Bailey. Pic: HM Treasury
Mr Bailey said he spoke to Mr Hunt on Friday and had a “meeting of minds” on the issue of “fiscal sustainability”.
Taking questions in Washington, he said: “I can tell you that I spoke to Jeremy Hunt, the new chancellor, yesterday. I can tell you that there was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that.”
Read more:
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Jeremy Hunt is arguably now more powerful than PM
‘Grotesque chaos’: Starmer hits out at Truss
He continued: “It’s not appropriate for me to constrain the choices he makes but the very clear message I would give and it is a clear message for everybody, including a clear message for markets.
“I can tell you there is a very clear and immediate meeting of minds on the importance of stability and sustainability.”
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‘Mistakes’ in mini-budget
Reflecting on the government’s recent mini-budget, Mr Hunt told Sky News that “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”.
He added that it was also 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.”
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‘It was a mistake to fly blind’
Mr Hunt’s appointment has so far failed to dampen speculation of an imminent coup against Ms Truss.
Rishi Sunak, the defeated leadership contender and former chancellor, as well as Defence Secretary Ben Wallace, have been among the names flagged as potential replacements.
Elsewhere, there was speculation that including the Ministry of Defence (MoD) in any round of spending cuts could spark a clash with Mr Wallace.
A MoD source said he will hold Ms Truss to the pledges made.
Ms Truss promised to increase defence spending to 3% of GDP by 2030 in the wake of the war in Ukraine.
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The fast-moving developments on Trump’s Ukraine peace deal are dominating the G20 summit in South Africa, as European leaders scramble to put together a counter-proposal to the US-Russia 28-point plan and reinsert Ukraine into these discussions.
European countries are now working up proposals to put to President Trump ahead of his deadline of Thursday to agree a deal.
Ukraine is in a tight spot. It cannot reject Washington outright – it relies on US military support to continue this war – but neither can it accept the terms of a deal that is acutely favourable to Russia, requiring Ukraine to give up territory not even occupied by Moscow and reducing its army.
Overnight, the UK government has reiterated its position that any deal must deliver a “just and lasting peace”.
Ukraine war latest: Kyiv to discuss ending war in talks in Switzerland
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Keir Starmer calls for growth plan at G20
The prime minister, who spoke with E3 allies President Macron of France, Chancellor Merz of Germany and President Zelenskyy of Ukraine on the phone on Friday, is having more conversations today with key partners as they work out how to handle Trump and improve this deal for Ukraine.
One diplomatic source told me allies are being very careful not to criticise Trump or his approach for fear of exacerbating an already delicate situation.
Instead, the prime minister is directing his attacks at Russia.
Read more:
Trump’s 28-point Ukraine peace plan in full
Analysis: We could all pay if Europe doesn’t guarantee Ukraine’s security
Prime Minister Keir Starmer attends a plenary session on the first day of the G20 Leaders’ Summit. Pic: Reuters
“There is only one country around the G20 table that is not calling for a ceasefire in Ukraine and one country that is deploying a barrage of drones and missiles to destroy livelihoods and murder innocent civilians,” he said on Friday evening.
“Time and again, Russia pretends to be serious about peace, but its actions never live up to its words.”
Pic: AP
On the Trump plan, the prime minister said allies are meetin on Saturday “to discuss the current proposal on the table, and in support of Trump’s push for peace, look at how we can strengthen this plan for the next phase of negotiations”.
Strengthening the plan really means that they want to rebalance it towards Ukraine’s position and make it tougher on Russia.
“Ukraine has been ready to negotiate for months, while Russia has stalled and continued its murderous rampage. That is why we must all work together with both the US and Ukraine, to secure a just and lasting peace once and for all,” said the prime minister.
“We will continue to coordinate closely with Washington and Kyiv to achieve that. However, we cannot simply wait for peace.
“We must strain every sinew to secure it. We must cut off Putin’s finance flows by ending our reliance on Russian gas. It won’t be easy, but it’s the right thing to do.”
Pic: AP
Europeans hadn’t even seen this deal earlier in the week, in a sign that the US is cutting other allies out of negotiations – for now at least.
Starmer and other European leaders want to get to a position where Ukraine and Europe are at least at the table.
There is some discussion about whether European leaders such as Macron and Meloni might travel to Washington to speak to Trump early next week in order to persuade him of the European and Ukrainian perspective, as leaders did last August following the US-Russian summit in Alaska.
But Sky News understands there are no discussions about the PM travelling to Washington next week ahead of the budget.
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