Who’s in charge? Hunt reverses Truss plans
Chancellor Jeremy Hunt has distanced himself from Prime Minister Liz Truss’s bungled growth plan by saying tax rises and spending cuts lie ahead.
He is expected to delay by 12 months a planned reduction to the basic rate of income tax, according to a report this weekend, adding to other reversals of tax cuts that were announced in the mini-budget by his predecessor Kwasi Kwarteng.
Mr Hunt, who was parachuted into Number 11 on Friday following the sacking of Mr Kwarteng, is focused on a “clean state” which suggests re-drawing the new Prime Minister’s strategy.
His comments, including an assertion that “mistakes” were made by his predecessor, has raised questions about who is in charge of the government.
Asda chairman Lord Rose described Ms Truss as a “busted flush” and Tory MPs are lining up to question her authority now that she has forfeited her plan. There is open talk of campaigns to remove her.
Mr Hunt is the fourth Chancellor this year, but there could be a fifth if a new Prime Minister is ushered into Downing Street and chooses a new neighbour.
Mr Hunt, who insists Ms Truss is in charge and that her central focus on growth remains unchanged, made it clear there are likely to be tax rises and that all departments would be asked to seek savings. This contradicts Ms Truss’s claims to MPs on Wednesday that she would not be cutting public spending.
“Taxes are not going to come down by as much as people hoped, and some taxes will have to go up. I’m going to be asking all government departments to find additional efficiency savings,” said Mr Hunt who, until Friday, was not even in the government and was away on holiday when the call came offering him the keys to the Treasury.
He had supported Rishi Sunak in the leadership contest, and today echoed the former Chancellor’s belief that the government needed to “show the world we have a plan that adds up financially”.
He said: “It was wrong to cut the top rate of tax for the very highest earners at a time where we’re going to have to be asking for sacrifices from everyone to get through a very difficult period.
“And it was wrong to fly blind and to announce those plans without reassuring people with the discipline of the Office for Budget Responsibility (OBR) that we actually can afford to pay for them.”
He said both of these were now in the process of “being put right”, but he said he hoped to keep the 1% cut to the basic rate of income tax, though this may not take place next year.
He said he would keep the energy price guarantee and praised the former chancellor for implementing it.
His comments came as Bank of England Governor Andrew Bailey told a meeting of financiers in Washington that there had been a “meeting of minds” when he held discussions with Mr Hunt on Friday.
In a statement issued by the Treasury ahead of a meeting with Ms Truss at Chequers on Sunday, Mr Hunt said: “My focus is on growth underpinned by stability. The drive on growing the economy is right – it means more people can get good jobs, new businesses can thrive and we can secure world class public services. But we went too far, too fast.
“We have to be honest with people and we are going to have to take some very difficult decisions both on spending and on tax to get debt falling but the top of our minds when making these decisions will be how to protect and help struggling families, businesses and people.
“I will set out clear and robust plans to make sure government spending is as efficient as possible, ensure taxpayer money is well spent and that we have rigorous control over our public finances.”