...and the new Chancellor has decided to put taxes
NEW Chancellor Jeremy Hunt was accused of a ‘silent coup’ yesterday after junking Trussonomics and warning of tax rises in his first full day in the job.
The former Health Secretary took an axe to Liz Truss’s pledge to cut taxes to spur growth and said there were ‘difficult decisions’ on spending to come.
His extraordinary reversal of her policy platform came after the Prime Minister sacked her Chancellor, Kwasi Kwarteng, and U-turned on a second budgetary pledge to keep corporation tax low.
Mr Hunt – a former leadership contender who backed Rishi Sunak after failing to make the ballot – is now the most powerful figure in Government following his appointment on Friday.
With Ms Truss too weak to sack him, he said he had been given a ‘clean slate’ on which to draw up a new fiscal statement to reassure the market by the end of the month.
Mr Hunt, who is due to see the Prime Minister at Chequers today, told BBC Radio 4’s Today programme: ‘I’m leaving open all possibilities this morning.
‘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.’
His pledge came just days after Ms Truss promised MPs she would ‘absolutely’ not make any spending cuts after being questioned by Sir Keir Starmer.
Mr Hunt also wasted no time in trashing the £43 billion miniBudget, telling Sky News yesterday: ‘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.’
Mr Hunt ran for the Conservative leadership this summer on a platform of slashing corporation tax to 15 per cent to boost growth.
As Chancellor, he will now enact Mr Sunak’s plan to increase corporation tax from 19 to 25 per cent in April after Ms Truss U-turned on her reversal of the policy.
Mr Hunt also previously opposed cuts to personal levies such as National Insurance and Income Tax – moves which Ms Truss has not so far rowed back on.
However, in a hint that they could be next in line, Mr Hunt said yesterday: ‘Some taxes will not be cut as quickly as people want. Some taxes will go up. So it’s going to be difficult.’
He also refused to guarantee that defence spending would rise by three per cent, as Ms Truss has pledged, saying that the department would need to find efficiencies. Health spending was also not guaranteed, he added.
The Chancellor also declined to say whether benefits will rise with inflation – something demanded by a significant caucus of Conservative MPs.
A Cabinet Minister yesterday accused Mr Hunt of a ‘silent coup’ while other Conservative MPs described Ms Truss as being in office but not in power.
One senior Tory MP who backed her said: ‘Appointing him is like putting up the white flag outside the door.
‘She’s swapped the job of Prime Minister for Foreign Secretary because that’s the only thing she’ll have any authority over.
‘Members will think, “We voted for tax cuts. Now we’ve got tax rises and austerity.” What is the point of Liz Truss if her policies are reversed? It’s not like she’s a good communicator.’
A former Tory Minister said: ‘What’s the point of Liz Truss if she’s implementing an agenda cooked up by Jeremy that she doesn’t agree with?’
Mr Hunt said earlier that he would ‘pretty much’ be delivering a ‘proper’ Budget.
‘We’re going to be talking about tax,’ he told ITV. ‘We’re going to be talking about spending, we’re going to be talking about medium and long-term plans.’
It came after Tory MP and former Health Minister Steve Brine said Ms Truss should now be seen as the chairman, while Mr Hunt is chief executive.
The Prime Minister’s decision to appoint Mr Hunt has unsettled many of those on the Tory Right who backed her pledge to reduce taxes.
Thatcherite Tory MP John Redwood offered an early warning to the new Chancellor, tweeting: ‘You cannot tax your way to higher growth.
‘If you tax too much you end up borrowing more as you have a worse slowdown.’
But most in the party described Mr Hunt as a ‘safe pair of hands’ and said his interviews yesterday morning were ‘self-assured’.
‘What’s the point of Liz if her policies are reversed?’