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 on 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 new tax measures would bring in £32 billion 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.
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.”
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: Cancelling the Health and Social Care Levy tax due to take place in April 2023 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 joined those who started publicly calling for her to go over the weekend.
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
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.
Labour’s shadow chancellor, Rachel Reeves, said Mr Hunt’s statement shows “the damage has been done” and said “this is a Tory crisis made in Downing Street, paid by working people with higher mortgage and higher borrowing costs”.
She said the Conservatives have “lost all credibility” and families will continue to endure huge costs.
“We’re still flying blind with no OBR forecasts and no clarity on the impact of their mistakes,” she added.
In a bid to calm the markets, the Treasury announced at 6am on Monday Mr Hunt was going to reveal parts of his medium-term fiscal plan – which was due to take place on 31 October.
Over the weekend, Mr Hunt promised to slow down Ms Truss’ tax cuts and said “some taxes will go up” as he worked on tearing up the mini-budget that has caused weeks of economic turmoil.
His comments were welcomed by the Bank of England’s governor, Andrew Bailey, who said there had been an “immediate meeting of minds on the importance of stability and sustainability” when he spoke to Mr Hunt on Friday.
While the politicians talk, so many people come from around the world to try to get across the Channel on small boats. But why?
Why make such a perilous crossing to try to get to a country that seems to be getting increasingly hostile to asylum seekers?
As the British and French leaders meet, with small boats at the forefront of their agenda, we came to northern France to get some answers.
It is not a new question, but it is peppered with fresh relevance.
Over the course of a morning spent around a migrant camp in Dunkirk, we meet migrantsfrom Gaza, Iraq, Eritrea, South Sudan, Sri Lanka and beyond.
Some are fearful, waving us away; some are happy to talk. Very few are comfortable to be filmed.
All but one man – who says he’s come to the wrong place and actually wants to claim asylum in Paris – are intent on reaching Britain.
They see the calm seas, feel the light winds – perfect conditions for small boat crossings.
John has come here from South Sudan. He tells me he’s now 18 years old. He left his war-torn home nation just before his 16th birthday. He feels that reaching Britain is his destiny.
“England is my dream country,” he says. “It has been my dream since I was at school. It’s the country that colonised us and when I get there, I will feel like I am home.
“In England, they can give me an opportunity to succeed or to do whatever I need to do in my life. I feel like I am an English child, who was born in Africa.”
Image: ‘England is my dream country,’ John tells Adam Parsons
He says he would like to make a career in England, either as a journalist or in human resources, and, like many others we meet, is at pains to insist he will work hard.
The boat crossing is waved away as little more than an inconvenience – a trifle compared with the previous hardships of his journey towards Britain.
We meet a group of men who have all travelled from Gaza, intent on starting new lives in Britain and then bringing their families over to join them.
One man, who left Gaza two years ago, tells me that his son has since been shot in the leg “but there is no hospital for him to go to”.
Next to him, a man called Abdullah says he entered Europe through Greece and stayed there for months on end, but was told the Greek authorities would never allow him to bring over his family.
Britain, he thinks, will be more accommodating. “Gaza is being destroyed – we need help,” he says.
Image: Abdullah says ‘Gaza is being destroyed – we need help’
A man from Eritreatells us he is escaping a failing country and has friends in Britain – he plans to become a bicycle courier in either London or Manchester.
He can’t stay in France, he says, because he doesn’t speak French. The English language is presented as a huge draw for many of the people we talk to, just as it had been during similar conversations over the course of many years.
I ask many of these people why they don’t want to stay in France, or another safe European country.
Some repeat that they cannot speak the language and feel ostracised. Another says that he tried, and failed, to get a residency permit in both France and Belgium.
But this is also, clearly, a flawed survey. Last year, five times as many people sought asylum in France as in Britain.
And French critics have long insisted that Britain, a country without a European-style ID card system, makes itself attractive to migrants who can “disappear”.
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1:48
Migrant Channel crossings hit new record
A young man from Iraq, with absolutely perfect English, comes for a chat. He oozes confidence and a certain amount of mischief.
It has taken him only seven days to get from Iraq to Dunkirk; when I ask how he has made the trip so quickly, he shrugs. “Money talks”.
He looks around him. “Let me tell you – all of these people you see around you will be getting to Britain and the first job they get will be in the black market, so they won’t be paying any tax.
“Back in the day in Britain, they used to welcome immigrants very well, but these days I don’t think they want to, because there’s too many of them coming by boat. Every day it’s about seven or 800 people. That’s too many people.”
“But,” I ask, “if those people are a problem – then what makes you different? Aren’t you a problem too?”
He shakes his head emphatically. “I know that I’m a very good guy. And I won’t be a problem. I’ll only stay in Britain for a few years and then I’ll leave again.”
A man from Sri Lanka says he “will feel safe” when he gets to Britain; a tall, smiling man from Ethiopia echoes the sentiment: “We are not safe in our home country so we have come all this way,” he says. “We want to work, to be part of Britain.”
Emmanuel is another from South Sudan – thoughtful and eloquent. He left his country five years ago – “at the start of COVID” – and has not seen his children in all that time. His aim is to start a new life in Britain, and then to bring his family to join him.
He is a trained electrical engineer, but says he could also work as a lorry driver. He is adamant that Britain has a responsibility to the people of its former colony.
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Emmanuel Macron has said the UK and France have a “shared responsibility” to tackle the “burden” of illegal migration, as he urged co-operation between London and Paris ahead of a crunch summit later this week.
Addressing parliament in the Palace of Westminster on Tuesday, the French president said the UK-France summit would bring “cooperation and tangible results” regarding the small boats crisis in the Channel.
Image: King Charles III at the State Banquet for President of France Emmanuel Macron. Pic: PA
Mr Macron – who is the first European leader to make a state visit to the UK since Brexit – told the audience that while migrants’ “hope for a better life elsewhere is legitimate”, “we cannot allow our countries’ rules for taking in people to be flouted and criminal networks to cynically exploit the hopes of so many individuals with so little respect for human life”.
“France and the UK have a shared responsibility to address irregular migration with humanity, solidarity and fairness,” he added.
Looking ahead to the UK-France summit on Thursday, he promised the “best ever cooperation” between France and the UK “to fix today what is a burden for our two countries”.
Sir Keir Starmer will hope to reach a deal with his French counterpart on a “one in, one out” migrant returns deal at the key summit on Thursday.
King Charles also addressed the delegations at a state banquet in Windsor Castle on Tuesday evening, saying the summit would “deepen our alliance and broaden our partnerships still further”.
Image: King Charles speaking at state banquet welcoming Macron.
Sitting next to President Macron, the monarch said: “Our armed forces will cooperate even more closely across the world, including to support Ukraine as we join together in leading a coalition of the willing in defence of liberty and freedom from oppression. In other words, in defence of our shared values.”
In April, British officials confirmed a pilot scheme was being considered to deport migrants who cross the English Channel in exchange for the UK accepting asylum seekers in France with legitimate claims.
The two countries have engaged in talks about a one-for-one swap, enabling undocumented asylum seekers who have reached the UK by small boat to be returned to France.
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Britain would then receive migrants from France who would have a right to be in the UK, like those who already have family settled here.
The small boats crisis is a pressing issue for the prime minister, given that more than 20,000 migrants crossed the English Channel to the UK in the first six months of this year – a rise of almost 50% on the number crossing in 2024.
Image: President Macron greets Commons Speaker Sir Lindsay Hoyle at his address to parliament in Westminster.
Elsewhere in his speech, the French president addressed Brexit, and said the UK could not “stay on the sidelines” despite its departure from the European Union.
He said European countries had to break away from economic dependence on the US and China.
“Our two countries are among the oldest sovereign nations in Europe, and sovereignty means a lot to both of us, and everything I referred to was about sovereignty, deciding for ourselves, choosing our technologies, our economy, deciding our diplomacy, and deciding the content we want to share and the ideas we want to share, and the controversies we want to share.
“Even though it is not part of the European Union, the United Kingdom cannot stay on the sidelines because defence and security, competitiveness, democracy – the very core of our identity – are connected across Europe as a continent.”
The Princess of Wales and celebrities attended the King’s star-studded state banquet on Tuesday, where Emmanuel Macron paid tribute to the late Queen Elizabeth II.
On the first day of Mr Macron’s state visit, King Charles gave a toast in French and said the three-day trip was another chance to “celebrate a deep and enduring friendship”.
“What’s possibly the most remarkable thing is the way in which the speciality of one country is part of the story of the other,” the monarch said.
“For centuries, our citizens have admired one another. We’ve made each other laugh, and we’ve imitated one another.”
Image: The Prince and Princess of Wales at the State Banquet. Pic: PA
Image: The banquet hall at Windsor Castle. Pic: PA
Image: The King makes a speech at a banquet at Windsor Castle. Pic: PA
Image: King Charles looks at Emmanuel Macron at a state banquet at Windsor Castle. Pic: PA
After the King’s speech, Mr Macron told him France had a “real affection for your mother” Queen Elizabeth II, adding he believed the feeling was “reciprocal”.
“She was your queen,” he said. “To us, she was the Queen.”
He capped off his speech – which repeated his calls for closer relations that he made earlier in the Palace of Westminster – by saying: “In honour of the United Kingdom, of this entente amico that unites our two fraternal peoples in an unwavering alliance.
“Long live the United Kingdom of Great Britain and Northern Ireland! Long live France!”
Image: Emmanuel Macron gives a speech at a state banquet at Windsor Castle. Pic: PA
The Princess of Wales also made her first appearance at a state banquet in almost two years, sitting next to the French president.
Image: Emmanuel Macron and Kate, the Princess of Wales, share a toast. Pic: PA
Also in attendance were Sir Mick Jagger, frontman of The Rolling Stones, who was joined by his fiancee Melanie Hamrick, and Sir Elton John, who was accompanied by his husband David Furnish.
Image: Mick Jagger taking his seat at the state banquet at Windsor Castle. Pic: PA
Image: Elton John and David Furnish at the state banquet at Windsor Castle. Pic: PA
Meanwhile, it was announced that the Bayeux Tapestry, depicting the Norman conquest of England, will return to the UK for the first time in more than 900 years, and will feature in an exhibition from September 2026 to July 2027.
Mr Macron joked ahead of the state banquet that negotiations to bring the 11th-century artwork back to the UK took longer “than all the Brexit tests”. Talks on a loan had started as early as 2018.