Chancellor Jeremy Hunt, just four days in office, tore up predecessor Kwasi Kwarteng’s mini-budget and abandoned key tenets of Liz Truss’ economic agenda.
Mr Hunt reversed “almost all” of the tax plans announced on September 23 in a pre-recorded statement released Monday morning, saying the reversal would help supply “stability” after weeks of market turbulence.
Here is Mr Hunt’s full statement:
A key responsibility of any government is to do what is required for economic stability.
This is critical for businesses making long-term investment decisions and for families concerned about their jobs, their mortgages and the cost of living.
No government can control markets, but any government can provide assurance about the sustainability of public finances, and that is one of the many factors affecting market behavior.
And that’s why, even though the Prime Minister and I both committed to cutting the corporate tax on Friday, she has listened to concerns about the mini-budget and confirmed that we will not go ahead with the announced corporate tax cut.
The government decided today to make further changes to the mini-budget.
And to reduce unhelpful speculation about what they are, we’ve decided to announce them ahead of the mid-term financial plan, which is two weeks from now.
I will make a detailed statement before Parliament and answer questions from MEPs.
However, as these decisions are market sensitive, I agreed with the speaker on the need to provide an early brief summary of the changes, all aimed at instilling confidence and stability.
First, we will reverse almost all of the fiscal measures announced three weeks ago in the Growth Plan that have not yet initiated parliamentary legislation.
So while we proceed with the elimination of health and social security contributions and the changes to stamp duty, we will no longer proceed with:
The reduction in dividend tax rates.
The rollback of non-tariff labor reforms introduced in 2017 and 2021.
The new VAT free shopping scheme for non-UK visitors.
Or the alcohol tax rate freeze.
Second, the government is currently planning to lower the base rate of personal income tax to 19% from April 2023.
But at a time when markets are rightly calling for a commitment to sustainable public finances, borrowing to fund that tax cut is not right.
Therefore, I have decided that the base rate of income tax will remain at 20%, indefinitely until economic conditions permit a reduction.
Coupled with the decision not to cut corporate tax and restoring the top income tax rate, the measures I announced today will raise around £32 billion each year.
Finally, the biggest single expense in the growth plan was the energy price guarantee.
This is a landmark policy that is helping millions of people through a difficult winter and today I want to confirm that the support we are providing through April next year will remain the same.
But beyond that, the Prime Minister and I have agreed that it would be irresponsible to continue exposing public finances to the unlimited volatility of international gas prices.
So today I am announcing a Treasury led review of how we are supporting energy bills beyond April next year.
The goal is to develop a new approach that will cost the taxpayer significantly less than planned while ensuring enough support for those in need.
All support for businesses is aimed at those most affected.
And the new approach will better promote energy efficiency.
The most important goal for our country at the moment is stability.
Governments cannot eliminate volatility in markets, but they can do their part, and we will, because instability affects the prices of things in stores, the cost of mortgages, and the value of pensions.
There will be harder choices to make, both tax and spending, as we meet our commitment to reducing debt as a part of the economy over the medium term.
All departments need to redouble their efforts to find savings, and some areas of spending need to be cut.
But as I promised over the weekend, our priorities will always be the most vulnerable in the difficult decisions that lie ahead.
And I remain extremely optimistic about the UK’s long-term economic prospects as we fulfill our growth mission.
But growth requires trust and stability, and the UK will always prevail.
This government will therefore make all the difficult decisions that this requires.
https://www.telegraph.co.uk/business/2022/10/17/full-jeremy-hunts-speech-scrapping-almost-mini-budget/ Jeremy Hunt’s speech scrapping ‘almost all’ of the mini-Budget