Jeremy Hunt: ‘We must take decisions of eye-watering difficulty’

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Chancellor will not rule out new windfall tax or scrapping pensions triple lock, as rebels speed up plots to oust Liz Truss

Jeremy Hunt: ‘We must take decisions of eye-watering difficulty’
In full: Chancellor Jeremy Hunt delivers Commons statement on mini-budget U-turns

Jeremy Hunt will on Tuesday confront the Cabinet with a demand to find new spending cuts to restore Britain’s economic credibility after ripping up Liz Truss’s tax plans.

On Monday, the new Chancellor warned MPs that decisions of “eye-watering difficulty” would be needed and declined to rule out scrapping the pensions triple lock or introducing a new windfall tax.

The Telegraph understands that Mr Hunt will ask that savings are even found in the health and defence budgets, despite protests from Cabinet colleagues.

The U-turns left Ms Truss in a precarious position, with Labour mocking her failure to address MPs on Monday and Tory rebels speeding up plots to oust the Prime Minister.

On Monday night, she said sorry for the first time for “mistakes” in economic policy but vowed to fight on, telling the BBC: “I will lead the Conservatives into the next general election.

“First of all, I do want to accept responsibility and say sorry for the mistakes that have been made. I wanted to act, to help people with their energy bills, to deal with the issue of high taxes, but we went too far and too fast. I have acknowledged that.

“I have put in place a new Chancellor with a new strategy to restore economic stability. Now what I am focused on is delivering for the public.”

Sir Graham Brady, the 1922 Committee chairman, met with the Prime Minister in private on Monday and is expected by some senior Tories to communicate the scale of party discontent to her in another meeting in the next 36 hours.

Mr Hunt tore up Ms Truss’s mini-Budget, including scaling back a promise to freeze household energy bills for two years. They will now only be capped until April next year. The change means households could see annual energy bills hit as much as £5,000 next spring, at the same time as mortgage rates are set to soar.

Markets reacted positively to the Chancellor’s announcement. The Government’s 10-year and 30-year borrowing costs fell by the most of any day on record, while the pound climbed two per cent against the dollar to break above $1.14.

Mr Hunt denied that “austerity 2.0” would be imposed, but think tanks warned that spending cuts worth tens of billions of pounds were still needed to balance the books.

He told the Commons: “We are a country that funds our promises and pays our debts and when that is questioned, as it has been, this Government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances. That means decisions of eye-watering difficulty.

“But I give the House and the public this assurance – every single one of those decisions, whether reductions in spending or increases in tax, will be shaped through core compassionate conservative values that will prioritise the needs of the most vulnerable.”

A Treasury source said of Tuesday’s Cabinet meeting: “Health and defence won’t be exempt from finding savings. No department will be ring-fenced. That message will be delivered to the Cabinet.”

Mel Stride, a senior Conservative MP, suggested that Mr Hunt was “under half way” to plugging the fiscal hole and predicted spending cuts to health, social care and pensions.

He told BBC Radio 4’s PM programme: “I think the OBR [Office for Budget Responsibility] is probably sitting on a figure for that fiscal hole of about £70 or £72 billion. So he’s still got another £40 billion to go – he’s under half way.

“Without leaning into spending in a meaningful way, it’s very difficult to see how he’s going to close that gap down.”  

Mr Hunt’s intervention, which abandoned all new tax cuts except for reductions in National Insurance and stamp duty, piled further political pressure on Ms Truss.

Chancellor Jeremy Hunt reverses 'almost all' mini-Budget tax cuts

The Prime Minister was accused of ducking scrutiny as she declined to speak in Labour’s urgent economic debate, with Sir Keir Starmer, the Labour leader, joking: “The lady’s not for turning up.”

Two more Conservative MPs went public with calls for Ms Truss to resign, taking the total to five. More are expected in the coming days.

Sir Charles Walker, a Tory veteran who is stepping down at the next election, called the Government “catastrophically incompetent” and said Ms Truss’s position was “untenable”. Angela Richardson, the Tory MP for Guildford, told The Telegraph it would be “better for the party and for the country to have a change in leadership at the top”.

1922 Committee executive members have singled out Prime Minister’s Questions on Wednesday as a key moment for Ms Truss to reassert authority. She held informal talks with Cabinet ministers over drinks and snacks in Downing Street on Monday night, with their support now critical to keeping her in post.

The Telegraph can reveal that Kemi Badenoch, the International Trade Secretary, on Monday morning stressed the need for clear government communications after a challenging few weeks and said the string of policy reversals would have to be clearly explained to avoid more “instability”.

At the end of last week, Tory rebels were predicting that Ms Truss would be gone by Christmas, but some believe she now faces a battle to reach the end of the week.

The Prime Minister’s defenders have dismissed such talk, insisting she is not considering resignation and warning that a snap election could follow her being ousted from Downing Street.

But the party mood is turning, according to recent surveys. The Telegraph can reveal that a poll of Tory members suggested Rishi Sunak, not Ms Truss, would be elected if the summer leadership vote was held again.

The survey, by J.L. Partners, was of 500 Tory members and weighted for the last leadership result. Of those members with a view, 60 per cent said they would vote for Mr Sunak and 40 per cent for Ms Truss.

Meanwhile, a poll from Redfield Wilton gave Labour a 36 percentage point lead over the Tories, which would equal electoral wipeout.

Mr Hunt said in a Sky News interview on Monday night that he believed Ms Truss would still be Prime Minister at Christmas despite growing calls for her to go. He denied ambitions to become prime minister, saying: “I rule it out, Mrs Hunt rules it out, three Hunt children rule it out.” The chancellor urged Conservative MPs to “give her a chance”.

Monday began with the unexpected announcement from the Treasury that elements of the Medium-Term Fiscal Plan, which had been due on Oct 31, would be announced early.

The news, made public at around 6am, was an apparent attempt to reassure the markets that there was a new plan to bring down debt before trading began.

The Chancellor said the basic income tax rate would remain at 20 per cent “indefinitely”, scrapping not only Ms Truss’s plan for a 1p cut next April but also Mr Sunak’s previous promise to make the change in April 2024. He also abandoned promises last month of a dividend tax cut, a new VAT-free shopping scheme and a freeze on alcohol duties.

He is raking in an extra £32 billion in taxes thanks to the U-turns announced since the mini-Budget, undoing most of the £45 billion of tax cuts announced by Kwasi Kwarteng, his predecessor.

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