Jeremy Hunt reverses 'almost all' tax cuts in mini-budget and says energy bills support scheme to be scaled back
the new chancellor said he was making further changes to the mini-budget to "reduce unhelpful speculation" about what was happening with the government's growth plan ahead of the medium-term fiscal plan on Halloween.
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 for 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.
"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 Treasury said new tax measures would bring in £32bn 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.
'A new approach'
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."
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: reversing the increase in national insurance contributions 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".