Tough decisions on taxes and spending ahead, new chancellor warns
The new Chancellor slammed the Liz Truss administration’s “mistakes” in his first interview since taking office, as he warned of “tough decisions” to come on taxes and spending.
Jeremy Hunt, who parachuted into Number 11 to replace Kwasi Kwarteng in a bid to restore order to Ms Truss’s struggling administration, also suggested some taxes could rise as he promised to bring stability in the country following the disastrous mini-budget. .
It comes as Ms Truss’ prime ministership remains in jeopardy this weekend after she sacked Mr Kwarteng and ditched much of his mini-budget in an extraordinary gamble to stay in power.
After three weeks of turmoil in financial markets following Mr Kwarteng’s £43billion mini tax bill, Ms Truss ended days of frenzied speculation by forcing her friend out of office and back on his pledge to scrap the planned corporate tax hike from 19% to 25%, a central plank of his leadership campaign.
Mr Hunt, a two-time Conservative leadership candidate and former Foreign Secretary, repeatedly insisted on Saturday morning that ‘difficult’ decisions were to be made, but denied the UK was heading towards another era of austerity.
He also insisted Ms Truss’ growth plan was “absolutely right”.
“It’s a great honor to do the job the Prime Minister has asked me to do, but I want to be honest with people: we have some very difficult decisions to make,” he told Sky News .
“The last few weeks have been very tough but the context is of course coming out of a pandemic and a cost of living crisis.
“And what the people want, the markets want, the country needs right now is stability. No chancellor can control the markets.
“But what I can do is show that we can afford our tax and spending plans, and that will require some very tough spending and tax decisions.”
He admitted Ms Truss had made mistakes, but positioned himself as a pair of safe hands who could help solve the political and economic crisis facing the UK.
“It was a mistake when we are going to ask for tough tax and spending decisions at all levels to reduce the rate of tax paid by the wealthiest.
“It was a mistake to fly blind and make these forecasts without giving people the confidence of the Office of Budget Responsibility by saying the sums add up.”
“The prime minister has acknowledged that, that’s why I’m here.”
But although Mr Hunt did not provide specific details on what the much-awaited October 31 budget statement might contain, he did signal that tax hikes could be coming.
“Spending will not increase as much as people would like and all departments will have to find more efficiencies than they had anticipated.”
“And some taxes will not be reduced as quickly as people want.
“Some taxes will increase. So it will be difficult.”
At a brief Downing Street press conference on Friday, Ms Truss had rejected calls for her resignation, saying she was “absolutely determined to deliver what I have promised”.
“It’s clear that parts of our mini-budget have gone further and faster than markets expected, so how we fulfill our mission right now has to change,” she said.
“We will do whatever is necessary to ensure that debt declines as a share of the economy over the medium term.”
It remains to be seen whether Friday’s embarrassing U-turn will be enough to turn the tide, with multiple reports of Tory MPs and big Tories plotting moves to force her out of office even as Cabinet ministers have remained publicly loyal to the Prime Minister.
The Times newspaper even quoted a source apparently close to Mr Kwarteng as suggesting Ms Truss may have only bought herself a few more weeks in power.
For many observers, it appeared that the end could be near for the prime minister after only a few weeks in office.
Former Tory leader Lord Hague warned Ms Truss’s job as Prime Minister was ‘hanging by a thread’, while former Tory Chancellor Lord Hammond said events in recent weeks had damaged reputation party budgetary discipline.
Loyal MPs on Friday evening were urging party colleagues to reconsider any attempt to oust Ms Truss, who is nominally immune from a leadership vote for another year under rear committee rules -ban 1922.
Welsh Secretary Sir Robert Buckland, appearing on BBC Radio 4’s Any Questions, warned: ‘I think if we start with gay abandonment, throwing another Prime Minister to the wolves, we are going to face to more delay, more debate, more instability.”
But even staunchly loyal MP Sir Christopher Chope had harsh words for his party leader, after he defended her on Thursday and ruled out any overthrow.
“I feel disappointed, very disappointed. And I have expressed my disbelief at what I have heard today because it is completely inconsistent with everything the Prime Minister stood for when she was elected” , he told BBC Newsnight.