The UK’s new Treasury chief has scrapped most of new Prime Minister Liz Truss’s controversial tax-cutting economic agenda, which threw financial markets into turmoil and sent the pound tumbling.
In a video statement made on Monday, Chancellor of the Exchequer Jeremy Hunt announced the mammoth U-turn in a bid to “give certainty” about public finances and calm markets.
The move will be seen as a huge blow to Truss’s hold on power, which was already under pressure after assuming the role with a minority of support from Tory MPs and only weakened by reaction to the controversial tax measures.
Truss had already dumped plans to abolish the nation’s top tax bracket in a major tax break for the richest Britons, and on Friday scrapped her plan to cut corporation tax.
Hunt’s move to scrap “almost all” of the tax measures announced in the government’s “mini-budget” last month included ditching changes to payroll tax, a VAT-free (Value Added Tax) shopping scheme for international visitors, and a freeze on alcohol duty rates.
He said the health and social care levy would still be abolished and stamp duty changes would still go ahead.
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Hunt said the energy price guarantee, introduced in the face of spiralling energy costs provoked by Russia’s war on Ukraine, would only last until April, after which he government would search for a cheaper option.
“A central responsibility for any government is to do what’s necessary for economic stability,” Hunt said.
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“This is vital for businesses making long term investment decisions, for families concerned about their jobs, their mortgages and the cost of living,” he said.
“No government can control markets but every government can give certainty about the sustainability of public finances and that is one of the many factors that influence how markets behave.”
