Chancellor 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 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:
- 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.”
Please use Chrome browser for a more accessible video player
‘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.
The decision for Mr Hunt to make a statement on Monday was made after meetings between the chancellor, Ms Truss, Mr Bailey and the head of the Debt Management Office on Sunday night.
The dates for Donald Trump’s state visit to the UK have been announced, with the US president due to be welcomed by the King from 17 to 19 September.
Buckingham Palace also confirmed that President Trump and first lady Melania will be hosted by the King and Queen at Windsor Castle.
It was expected that the three-day state visit would take place in September after Mr Trump let slip earlier in April that he believed that was when his second “fest” was being planned for.
Windsor was also anticipated to be the location after the US president told reporters in the Oval Office that the letter from the King said Windsor would be the setting. Refurbishment works at Buckingham Palace also meant that Windsor was used last week for French President Emmanuel Macron’s visit.
This will be Mr Trump’s second state visit to the UK, an unprecedented gesture towards an American leader, having previously been invited to Buckingham Palace in 2019.
Donald Trump and Melania Trump posing with Charles and Camilla in 2019. Pic: Reuters
He has also been to Windsor Castle before, in 2018, but despite the considerable military pageantry of the day, and some confusion around inspecting the guard, it was simply for tea with Queen Elizabeth II.
Further details of what will happen during the three-day visit in September will be announced in due course.
On Friday, Sky News revealed it is now unlikely that the US president will address parliament, usually an honour given to visiting heads of state as part of their visit. Some MPs had raised significant concerns about him being given the privilege.
But the House of Commons will not be sitting at the time of Mr Trump’s visit as it will rise for party conference season on the 16 September, meaning the president will not be able to speak in parliament as President Macron did during his state visit this week. However, the House of Lords will be sitting.
Please use Chrome browser for a more accessible video player
Labour MP: ‘Trump isn’t welcome here’
In February this year, Prime Minister Sir Keir Starmer presented the US president with the letter from the King inviting him to visit during a meeting at the White House.
After reading it, Mr Trump said it was a “great, great honour”, adding “and that says at Windsor – that’s really something”.
In February, Sir Keir Starmer revealed a letter from the King inviting Donald Trump to the UK. Pic: Reuters
In the letter, the King suggested they might meet at Balmoral or Dumfries House in Scotland first before the much grander state visit. However, it is understood that, although all options were explored, complexities in both the King and Mr Trump’s diaries meant it wasn’t possible.
Read more from Sky News:
Is the UK ready for a ‘Trump-fest’?
Elton and Jagger at royal banquet
King and Trump won’t hold private meeting
This week, it emerged that Police Scotland are planning for a summer visit from the US president, which is likely to see him visit one or both of his golf clubs in Aberdeenshire and Ayrshire, and require substantial policing resources and probably units to be called in from elsewhere in the UK.
Precedent for second-term US presidents, who have already made a state visit, is usually tea or lunch with the monarch at Windsor Castle, as was the case for George W Bush and Barack Obama.
A small plane has crashed at Southend Airport in Essex.
Essex Police said it was at the scene of a “serious incident”.
Images posted online showed huge flames and a large cloud of black smoke, with one witness saying they saw a “fireball”.
A police statement said: “We were alerted shortly before 4pm to reports of a collision involving one 12-metre plane.
“We are working with all emergency services at the scene now and that work will be ongoing for several hours.
“We would please ask the public to avoid this area where possible while this work continues.”
A huge fireball near the airport. Pic: Ben G
It has been reported that the plane involved in the incident is a Beech B200 Super King Air.
According to flight-tracking service Flightradar, it took off at 3.48pm and was bound for Lelystad, a city in the Netherlands.
One man, who was at Southend Airport with his family around the time of the incident, said the aircraft “crashed headfirst into the ground”.
John Johnson said: “About three or four seconds after taking off, it started to bank heavily to its left, and then within a few seconds of that happening, it more or less inverted and crashed.
“There was a big fireball. Obviously, everybody was in shock in terms of witnessing it. All the kids saw it and the families saw it.”
Mr Johnson added that he phoned 999 to report the crash.
Southend Airport said the incident involved “a general aviation aircraft”.
Four flights scheduled to take off from Southend this afternoon were cancelled, according to its website.
Flightradar data shows two planes that had been due to land at Southend were diverted to nearby airports London Gatwick and London Stansted.
Plumes of black smoke. Pic: UKNIP
Essex County Fire and Rescue Service said four crews, along with off-road vehicles, have attended the scene.
Four ambulances and four hazardous area response team vehicles are also at the airport, as well as an air ambulance, the East of England Ambulance Service said.
Its statement described the incident as “still developing”.
Fire engines at the airport
David Burton-Sampson, the MP for Southend West and Leigh, posted on social media: “I am aware of an incident at Southend Airport. Please keep away and allow the emergency services to do their work.
“My thoughts are with everyone involved.”
Local councillor Matt Dent said on X: “At present all I know is that a small plane has crashed at the airport. My thoughts are with all those involved, and with the emergency services currently responding to the incident.”
This breaking news story is being updated and more details will be published shortly.
Please refresh the page for the latest version.
You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.
UK
Heidi Alexander says ‘fairness’ will be government’s ‘guiding principle’ when it comes to taxes at next budget
Another hint that tax rises are coming in this autumn’s budget has been given by a senior minister.
Speaking to Sunday Morning with Trevor Phillips, Transport Secretary Heidi Alexander was asked if Sir Keir Starmer and the rest of the cabinet had discussed hiking taxes in the wake of the government’s failed welfare reforms, which were shot down by their own MPs.
Trevor Phillips asked specifically if tax rises were discussed among the cabinet last week – including on an away day on Friday.
Politics Hub: Catch up on the latest
Tax increases were not discussed “directly”, Ms Alexander said, but ministers were “cognisant” of the challenges facing them.
Asked what this means, Ms Alexander added: “I think your viewers would be surprised if we didn’t recognise that at the budget, the chancellor will need to look at the OBR forecast that is given to her and will make decisions in line with the fiscal rules that she has set out.
“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”
Ms Alexander said she wouldn’t comment directly on taxes and the budget at this point, adding: “So, the chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.
“When it comes to taxation, fairness is going to be our guiding principle.”
Read more:
Reeves won’t rule out tax rises
What is a wealth tax and how would it work?
👉Listen to Politics at Sam and Anne’s on your podcast app👈      
Afterwards, shadow home secretary Chris Philp told Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”
He then went on to repeat the Conservative attack lines that Labour are “crashing the economy”.
Please use Chrome browser for a more accessible video player
Chris Philp also criticsed the government’s migration deal with France
Mr Philp then attacked the prime minister as “weak” for being unable to get his welfare reforms through the Commons.
Discussions about potential tax rises have come to the fore after the government had to gut its welfare reforms.
Sir Keir had wanted to change Personal Independence Payments (PIP), but a large Labour rebellion forced him to axe the changes.
With the savings from these proposed changes – around £5bn – already worked into the government’s sums, they will now need to find the money somewhere else.
The general belief is that this will take the form of tax rises, rather than spending cuts, with more money needed for military spending commitments, as well as other areas of priority for the government, such as the NHS.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike