New chancellor Jeremy Hunt has announced almost every part of his predecessor’s mini-budget and fiscal policy will be reversed, including the two year £2,500 energy price cap, which will now only last for six months.
Hunt said the government will end the cap on energy prices in April and “will reverse almost all the tax measures” from the mini-budget.
They were announced less than four weeks ago but their impact saw the pound plummet, pensions threatened, mortgage rates rise, the chancellor sacked and the prime minister evermore likely to follow.
Hunt: ‘eye wateringly difficult decisions have to be made’
Along with the tax reversals, Hunt said “eye wateringly difficult decisions” have to be made about public spending raising concerns about a new round of austerity.
Compounding fears was Hunt’s announcement that Liz Truss’s energy price guarantee (EPG) – introduced to tackle inflation and help with the cost of living crisis – will end in April next year rather than in October 2024.
Analysts Cornwall Inisght said that without government support, the average energy bill in April will be £4,437. The Guardian reports a Treasury review to try and target the most needy is underway, which “will cost the taxpayer significantly less” than Truss’s two year EPG.
Hunt’s statement managed to steady the financial markets that had been in turmoil since his predecessor Kwasi Kwarteng’s “fiscal event” on September 23. The new chancellor got clearance from the speaker of the Commons to make a media statement before he later told MPs in the House that the “UK will always pay its way”.
Truss apologises for ‘going too far, too fast’
Truss apologised for going “too far too fast” with her economic policies in an interview on Monday night with the BBC’s political editor Chris Mason.
In it, the PM accepted responsibility for the problems manifesting from the “mini-budget” but refused to say if her political vision is already “dead” after barely 40 days in Downing Street. Truss told Mason that she will lead the Conservatives into the next general election.
The prime minister said: “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’ve acknowledged that. I put in place a new chancellor with a new strategy to restore economic stability.
“I recognise that we did act too fast, and that’s why I’ve adjusted what we’re doing and I do think it is the mark of an honest politician who does say, yes, I’ve made a mistake. I’ve addressed that mistake. And now we need to deliver for people, you known what we’ve said we’ll deliver.”
Regarding the energy price cap, Truss said “the most vulnerable will be protected into next winter. We’re looking at exactly how we can do that.
“And being in government is always about a balance or being able to make those decisions but I also have to think about and the chancellor has to think about economic stability.”