Terina Hine reports on new Chancellor Jeremy Hunt’s statement to the House of Commons, killing off Trussonomics while signalling brutal austerity cuts and a massive assault on working people and the poor
The new Chancellor, otherwise known as the de facto Prime Minister, gave a five-minute statement to the House of Commons in which he scrapped most of Truss and Kwarteng’s so called mini-Budget. Trussonomics is as dead as the Truss premiership.
This was the largest and fastest U-turn in recent British political history. In Hunt’s own words he was reversing “almost all the tax measures” in the Truss Growth Plan, set out by her former Chancellor Kwasi Kwarteng, only three weeks ago. In his statement to the House of Commons, Hunt announced the most staggering list of policy U-turns.
The list of reversals is comprehensive: the two-year energy price cap scrapped, to end in April, lasting not for two years but just six months; the 1p income tax cut ditched entirely along with the 45p tax rate; gone too are the freezes on corporation tax, on alcohol duties and the proposed VAT free shopping for international tourists, binned, along with the plans to change IR35 rules for employers and freelancers.
What remains is a short list indeed, but not an insignificant one: the abolition of the bankers’ bonus cap stays and the cuts to stamp duty and National Insurance will go ahead.
Ditching the energy support package, the only publicly popular part of the mini-Budget, will cost us all dearly. The policy capped the unit price of energy; now in April most of us will be charged as the providers see fit, some help will remain, but it will be means tested and available only to the “most vulnerable”.
Ideologically opposed to any form of windfall tax or price control the government is leaving consumers at the mercy of profiteering energy companies. To prevent “exposing public finances to unlimited volatility in international gas prices” the consumer will be exposed instead.
According to the Resolution Foundation the tax burden for British families will be its highest since 1950. Typical households will see incomes fall by £1,000 as a result of personal tax and benefit changes alone. So much for the Conservatives being the party of low tax. At the same time energy bills could hit £4,000 in spring, while mortgage rates are going through the roof as more and more people move away from fixed term rates.
But this is just the beginning. Hunt warned in his statement of “difficult decisions … on tax and spending” to come, expect a truly chilling Halloween budget on 31 October. All government departments have been instructed to find “efficiency savings” and spending will be cut. Meetings to discuss “debt cutting” plans and “efficiency savings” are underway, soon we will have new and brutal austerity measures. Hunt was the architect of NHS austerity when Secretary of State for Health, so his brutality should surprise to no one.
When Jeremy Hunt accepted the role of Chancellor it was said that he did so under instruction that no more of Truss’s mini-Budget would be undone. Monday’s fiscal statement clearly shows this has not held. Truss has lost even more power. Hunt is in effect the fifth Conservative PM since 2010.
So, what now is the point of Truss? She sold herself as the tax cutting leader, but all her policies have been scrapped. Another leader might fall back on personal charisma or political nouse. Unfortunately for Truss she has neither. She is clearly haemorrhaging the little support she had in parliament; so far there have been no kind words from her Cabinet colleagues and almost no one is willing to speak in her defence. No wonder she is depressed.
As many as 100 Conservative backbenchers have reportedly called for Truss’s resignation. After U-turning on her entire economic package, adopting her rival Rishi Sunak’s economic plan, she has now asked that fellow leadership contender, Penny Mordaunt, to stand in for her at the despatch box. It is inconceivable she can remain hiding in No.10 for much longer. Perhaps she has just given up entirely.
Whatever happens next the Tories are in deep trouble. Polls give the SNP more seats in parliament than the Tories; if an election was called today the Conservatives would not even be the official opposition. And all they have to offer: tax rises and spending cuts and another unelected prime minister.
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