New chancellor Jeremy Hunt has warned that taxes will rise as he gets a 'clean slate' on the disastrous mini-budget that triggered weeks of market turmoil.
Liz Truss sacked former chancellor Kwasi Kwarteng on Friday, later telling a brief press conference in Downing Street that the government would now be delivering its high-growth mission "in a different way". The prime minister also confirmed another u-turn on the proposals in the September mini-budget, backtracking on a previous pledge to scrap the planned rise in corporation tax.
Mr Hunt, who has held several Cabinet positions in the past and supported Rishi Sunak in the leadership contest after his own bid failed to get past the first vote, has been brought into Number 11 to head up the new approach. In his first round of broadcast interviews on Saturday morning, he admitted that Liz Truss' administration had made mistakes with their plans for the economy.
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He told Sky News: “There were mistakes. It was a mistake when we’re going to be asking for difficult decisions across the board on tax and spending to cut the rate of tax paid by the very wealthiest.
“It was a mistake to fly blind and to do these forecasts without giving people the confidence of the Office of Budget Responsibility saying that the sums add up. The Prime Minister’s recognised that, that’s why I’m here.”
Allies of Mr Hunt have likened his new role to that of the “chief executive” in government. This morning, Mr Hunt acknowledged that the prime minister had effectively relinquished control of the public finances over to him.
Appearing on BBC Radio 4’s Today programme, Mr Hunt signalled that he now has a “clean slate” on Mr Kwarteng's mini-budget. He said some taxes will be going up while budgets will have to be slashed.
He said: “Spending will not rise by as much as people would like and all Government departments are going to have to find more efficiencies than they were planning to.
“Some taxes will not be cut as quickly as people want. Some taxes will go up. So it’s going to be difficult.”
Despite criticising aspects of the mini-budget, Mr Hunt said he agreed with the fundamentals of Ms Truss' plan. “The fundamental strategy behind it all, which is that we have to solve the growth paradox if we want well-funded public services like the NHS and to keep taxes low and falling, then we have to increase our growth rate. That is absolutely right," he said.
The new chancellor admitted there would be “difficult decisions ahead”. He said: “The last few weeks have been very tough but the context of course is coming out of a pandemic and a cost-of-living crisis.
“The thing that people want, markets want, the country needs now, is stability. No Chancellor can control the markets - but what I can do is show that we can pay for our tax and spending plans and that is going to need some very difficult decisions on both spending and tax.”
Mr Hunt will meet with Treasury officials later on Saturday and with Ms Truss on Sunday at Chequers.
While Mr Hunt's appointment as chancellor was welcomed by some Tory MPs as “an experienced pair of hands”, some questioned why Mr Kwarteng was the one who had to go when he was pursuing policies Ms Truss advocated in her leadership campaign.
Labour leader Sir Keir Starmer said the whole government – and not just Mr Kwarteng – needed to go. Speaking after the news of the former chancellor's sacking, he said: “Changing the chancellor doesn’t undo the damage made in Downing Street. Liz Truss’ reckless approach has crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage. We need a change in government.”
In her press conference, Ms Truss said she was “incredibly sorry” to lose Mr Kwarteng, a long-standing political ally and friend who had backed her leadership bid from the outset. She insisted that Mr Hunt shared her vision of a “high-growth, low-tax economy”.
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