Truss in peril: Hunt declares U-turn on her tax plan as clamour grows for PM to quit

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By Alasdair Sandford
Jeremy Hunt leaves 10 Downing Street in London after he was appointed Chancellor of the Exchequer following the resignation of Kwasi Kwarteng, Friday Oct. 14, 2022.
Jeremy Hunt leaves 10 Downing Street in London after he was appointed Chancellor of the Exchequer following the resignation of Kwasi Kwarteng, Friday Oct. 14, 2022.   -   Copyright  Stefan Rousseau/PA via AP

Britain's new finance minister has outlined fresh tax and spending measures — two weeks earlier than a scheduled full statement — in a bid to quell turbulent markets.

The statement by Jeremy Hunt, who was appointed Chancellor of the Exchequer on Friday, represents a complete reversal of Liz Truss' controversial "mini-budget" that caused economic and political turmoil.

It comes amid reports of a growing revolt among ruling Conservative MPs against the prime minister, following the fiasco surrounding her economic plans.

Her position is increasingly in doubt as the central planks of her programme are ditched and her authority over her government and backbenchers is shot to pieces.

In his statement, Hunt said was giving details of the new plans early in order to calm markets. Almost all the previous tax measures are to be reversed in a move aimed at raising £32 billion (€37 billion) a year. A planned one percent cut in the basic rate of income tax for next April is being cancelled. 

He also said the massive energy support package will not be continued beyond next April. Instead, a Treasury-led review into how best to support homes and businesses with energy bills will be launched.

The former health and foreign secretary has been racing to overhaul the government's financial plans since he replaced Kwasi Kwarteng who was sacked on Friday. Kwarteng's unfunded tax cuts announced on September 23 sent the pound tumbling, borrowing costs soaring, and sparked a collapse in support for the ruling party.

On Sunday, Hunt and Truss held a crisis meeting at her country residence to prepare a new budget plan. Defending the government's new direction, he acknowledged his predecessor's mistakes and warned of "difficult decisions" to come.

Later, he met with the Governor of the Bank of England" and the head of the Debt Management Office on Sunday evening to "update them on these plans", the government statement said.

'Ideological jihadists'

A handful of Tory MPs have publicly called on Liz Truss to step down. "Enough is enough," one of them, Jamie Wallace, wrote on Twitter. "I have written to the Prime Minister to ask her to stand down as she no longer holds the confidence of this country."

Crispin Blunt, an MP for 25 years, backed his statement and told Channel 4 that "the game's up" for Truss. 

Another MP, Robert Halfon, told Sky News that Liz Truss' government had behaved like "libertarian Jihadists" in recent weeks and had treated the country like "laboratory mice" to carry out free-market experiments.

Alicia Kearns, the new chair of the influential House of Commons Foreign Affairs Committee, said the question of whether or not Truss should remain in Downing Street was "very difficult". 

She said the government’s problems are linked to policy and not just communication, warning that "dogmatism scares people".

Many Conservative MPs were appalled by the prime minister's news conference on Friday following Kwarteng's sacking. Truss said she was "incredibly sorry" to lose her close colleague but took no responsibility for recent events and only briefly answered questions.

Truss plan 'was a mistake' — Biden

Liz Truss launched her plan last month having consistently said she would immediately cut taxes once in office — despite repeated warnings from economists and even former Conservative ministers that doing so in the current climate would be extremely risky.

The dramatic consequences have badly tarnished Britain's reputation around the world and prompted criticism from global political and financial leaders. US Joe Biden said at the weekend that he "wasn't the only one that thought it was a mistake".

While avoiding criticising the British government directly, the European Commission's economic affairs chief Paolo Gentiloni said on Friday that there were "lessons to learn", and the volatile situation showed "how prudent we should be also with our fiscal and monetary mix".  

Jeremy Hunt was due to make a statement in the House of Commons on Monday afternoon. He will deliver a fuller medium-term fiscal plan as scheduled on October 31 alongside forecasts from the independent Office for Budget Responsibility, the Treasury said.

Additional sources • Reuters, AFP, AP