What was in the mini-budget and what has been scrapped?
Just over three weeks ago, then-chancellor Kwasi Kwarteng unveiled his tax-cutting mini-budget to MPs which caused economic turmoil in the UK.
Following a dramatic U-turn on a promise to abolish the 45% higher rate of income tax after backlash from the government’s own Conservative MPs earlier this month, Mr Kwarteng has now been sacked – and many of the other pledges in the mini-budget have been torn up.
On Friday, the government scrapped its decision to axe the rise in corporation tax to 25% next year.
Addressing the nation in a statement on Monday morning, newly appointed chancellor Jeremy Hunt confirmed that most of the other mini-budget proposals have also now been thrown in the bin as Prime Minister Liz Truss seeks to hold on to her premiership.
Here is a breakdown of what was in the government’s mini-budget at the end of September and what has changed:
Income tax:
What was pledged?
• The government pledged that the 45% higher rate of income tax would be abolished.
• There was a promise to reduce the basic rate of income tax to 19p in the pound by April 2023, meaning 31 million people would be better off by an average of £170 a year.
What has changed?
• The government rowed back on its decision to scrap the highest rate of income tax earlier this month.
• Mr Hunt said the basic rate of income tax would now “indefinitely” stay at 20p until economic conditions allowed a reduction.
“It is a deeply held Conservative value – a value that I share – that people should keep more of the money that they earn,” the new chancellor said.
“But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut.”
Corporation tax
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Truss confirms corporation tax U-turn
What was pledged?
• The government said it would cancel a UK-wide rise in corporation tax which was due to increase from 19% to 25% in April.
What has changed?
• Ms Truss confirmed in a brief press conference on Friday that she was dropping this flagship policy of her leadership campaign and that corporation tax will go up from 19% to 25% in April after all.
Energy package
What was pledged?
• The government said household bills would be cut by an expected £1,000 this year with aid from the energy price guarantee and £400 grant. The energy price guarantee had been due to cap prices for two years.
What has changed?
• Mr Hunt confirmed the energy price guarantee will now end in April after which time the government will look to target help on those most in need.
IR35 rules
What was pledged?
• The government promised to “simplify” IR35 rules – the rules which govern off-payroll working. It promised to change the regulations so pensions funds can increase UK investments.
What has changed?
• Mr Hunt confirmed the government will now abandon these proposed IR35 changes.
Alcohol duty
What was pledged?
• The government said in the mini-budget that planned increases in the duties on beer, for cider, for wine, and for spirits would be cancelled.
What has changed?
• Mr Hunt confirmed this will now no longer be the case, with the price of beer, cider, wine and sprits soon rising.
Dividend tax change
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Truss braces for tumultuous week
What was pledged?
• The government announced in the mini-budget that from 6 April 2023, the additional rate applying to dividend income would be abolished and the 1.25% rise in the dividend rates, initially brought into force in April this year, would be reversed.
What has changed?
• Mr Hunt said the government will no longer reverse the 1.25% rise in the dividend rates.
VAT-free shopping
What was pledged?
• The government pledged VAT-free shopping for overseas visitors.
What has changed?
• Mr Hunt said this policy has now been scrapped.
Stamp duty
What was pledged?
• The government promised to cut stamp duty which is paid when people buy a property in England and Northern Ireland. It said no stamp duty would be paid on the first £250,000 of any property and no stamp duty on the first £425,000 for first-time buyers.
What has changed?
• Mr Hunt confirmed this is one of very few policies in the controversial mini-budget which will remain.
National Insurance
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Truss would ‘cut national insurance’
What was pledged?
• The government said it would reverse the recent rise in National Insurance from 6 November. Workers and employers have paid an extra 1.25% since April 2022.
What has changed?
• Mr Hunt confirmed that, like stamp duty, this policy has survived the mini-budget cull.
Bankers’ bonuses
What was pledged?
• The government announced it was scrapping rules which limit bankers’ bonuses.
What has changed?
• Mr Hunt did not mention bankers’ bonuses in his statement. But a Treasury source has told Sky News there is “no change in policy there.” They said the cap “was bad policy” adding that it “didn’t cap bankers pay and was bad for financial stability”.
Donald Trump has said that his 28-point peace plan for Ukraine is “by far” not the “final offer”, ahead of crisis talks in Geneva.
Meeting on the sidelines of a G20 summit in South Africa, European and other Western leaders scrambled to respond to the US president’s demand for Ukraine to accept the plan drawn up by the Trump administration and the Kremlin.
In a joint statement on Saturday, they said the plan announced on Friday could serve as a basis for talks to end Russia’s war in Ukraine but required “additional work”.
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How Ukraine peace plan came about
Follow the latest on the Ukraine peace plan
As a result, a meeting has been hastily convened in Geneva, Switzerland, on Sunday, where national security advisers from the E3 – France, Britain and Germany – will meet EU, US and Ukrainian officials for further discussions.
Ahead of the talks, Volodymyr Zelenskyy said in a video address to his nation that Ukrainian representatives at the talks “know how to protect Ukrainian national interests and exactly what is needed to prevent Russia from carrying out” another invasion.
“Real peace is always based on security and justice,” the Ukrainian leader added.
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PM: ‘More to do’ on US Ukraine peace plan
The 28-point peace plan closely resembles the list of demands repeatedly stated by the Kremlin since it launched its full-scale invasion of Ukraine nearly four years ago and if adopted, would see Ukraine cede territory to Russia – and cut the size of its military.
Mr Trump has said he wants a response from Ukraine by Thursday, while suggesting an extension could be possible.
On Saturday, Mr Trump told reporters outside the White House that the plan was not the “final offer” when asked.
He said: “We’d like to get the peace, it should’ve happened a long time ago. The Ukraine war with Russia should’ve never happened. If I was president, it would have never happened. We’re trying to get it ended. One way or another, we have to get it ended.”
His secretary of state Marco Rubio insisted that the peace proposal was authored by the US, despite what a handful of senators have alleged.
“It is based on input from the Russian side. But it is also based on previous and ongoing input from Ukraine,” he said.
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The 28-point peace plan explained
Leaders have sought to balance praise for President Trump’s attempt to end the war with recognition that some terms in his proposal are unpalatable for Kyiv.
“There are many things that cannot simply be an American proposal, which requires broader consultation,” French
President Emmanuel Macron said on the sidelines of the G20, adding that an agreement had to allow for peace for Ukrainians and “security for all Europeans”.
German Chancellor Friedrich Merz underlined the importance to Europe of supporting Ukraine.
“If Ukraine loses this war and possibly collapses, it will have an impact on European politics as a whole, on the entire European continent. And that is why we are so committed to this issue,” he said.
“There is currently an opportunity to end this war, but we are still quite a long way from a good outcome for everyone.”
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Keir Starmer calls for growth plan at G20
Prime Minister Sir Keir Starmer told reporters in Johannesburg: “We are concerned about [caps on military], because it’s fundamental that Ukraine has to be able to defend itself if there’s a ceasefire.”
He said the proposal “requires additional work”, adding: “And that’s why there’s been the agreement that in Geneva tomorrow [Sunday], you’ll have senior US personnel, you’ll have European NSAs [national security advisers], including the UK NSA, and obviously Ukrainians there to work further on the draft.”
Sir Keir also spoke to Mr Trump, relaying discussions held at G20 to the US leader, according to a Downing Street spokesperson, who added that the two leaders would speak again on Sunday.
Meanwhile, Sir Keir, who has defended his decision to fly to the G20 days before a difficult budget, said the role of the G20 is “critical at this moment”.
“The G20 has worked together before to fix fundamental problems in the global economy. We need to find ways to play a constructive role again today in the face of the world challenges,” he said.
“I’d like to see us come together around a five-point plan for growth that leaves no one behind.”
Sir Keir Starmer, Emmanuel Macron and Friedrich Merz at the G20 summit. Pic: PA
The US, however, is boycotting the talks.
The Trump administration made its opposition to South Africa’s G20 agenda clear earlier this year when the country started holding meetings ahead of the summit. South Africa gets to set the agenda as the country holding the rotating G20 presidency.
G20 leaders broke with tradition and adopted a declaration at the start of their summit – despite opposition from the US.
Vincent Magwenya, spokesman for South African president Cyril Ramaphosa, said a leaders’ declaration was adopted unanimously in Johannesburg.
The White House later accused South Africa of refusing to facilitate a smooth transition of the G20 presidency.
Pic: AP
Read more:
Analysis: Europe scrambles at G20 over Ukraine peace plane
G20 lands in South Africa: But who feels forgotten?
The G20 bloc was formed in 1999 as a bridge between rich and poor nations to confront global financial crises.
While it often operates in the shadow of the powerful Group of Seven nations, G20 members represent around 85% of the world’s economy, 75% of international trade and more than half the global population.
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