Britain’s new finance minister Jeremy Hunt has reversed “almost all” of Liz Truss’s tax cuts in what the opposition said was a “complete humiliation” for the prime minister.
Mr Hunt said the country now needed to increase taxes and cut spending to rebuild stability and confidence.
He announced the government would ditch nearly all of the program that helped Ms Truss win the leadership of the ruling Conservative Party just over a month ago.
With the prime minister now fighting for her future, Labour Shadow Chief Secretary to the Treasury Pat McFadden said the move was a “complete humiliation”.
“The damage has now been done. She’s in an impossible position where the survival of the government is dependent on publicly torching everything that she believes,” he said.
“So today is a humiliation for her.
“It’s a humiliation for the government and the fear must be that the damage has been done and will leave the country paying a continued Tory instability premium and people paying a Tory premium on their mortgages for some time to come.”
Ms Truss’s spokesman denied that Mr Hunt was running the country after his new strategy sent the pound soaring and helped government bond prices start to recover from the rout that followed her government’s September 23 plan for unfunded tax cuts.
Ms Truss later sat, expressionless, in parliament as Mr Hunt detailed why he needed to reverse nearly all the policies that had helped her become prime minister.
“We are a country that funds our promises and pays our debts,” Mr Hunt told parliament, adding that what would follow was decisions of “eye-watering difficulty” to cut public spending.
Prime Minister Liz Truss listens to Shadow Chancellor Rachel Reeves’ response in parliament. Photo: Getty
Mr Hunt said halting the planned tax cuts would raise 32 billion pounds every year.
“I remain extremely confident about the UK’s long-term economic prospects as we deliver our mission to go for growth,” Mr Hunt said in a televised clip.
“But growth requires confidence and stability, and the United Kingdom will always pay its way.”
The government was forced to reverse course after markets reacted violently to Ms Truss’s plan, hammering the value of the pound and government bond prices and forcing the Bank of England to intervene to protect pension funds.
Adding to the pressure, the bank stuck to its schedule of ending the support on Friday, meaning Mr Hunt had been racing to reverse policies and find spending cuts to appease the markets and prevent borrowing costs from rising further on Monday morning.
He said government spending cuts would be required to narrow a hole in public finances that the Sunday Times reported was as big as £72 billion.
Ms Truss said on Monday the government was charting a new course for growth, as she emphasised the need for stability after Mr Hunt reversed nearly all of his predecessor’s mini-budget.
“The British people rightly want stability, which is why we are addressing the serious challenges we face in worsening economic conditions,” Ms Truss said on Twitter.
But the near total reversal of the economic plan leaves Ms Truss struggling to retain credibility.
Her about-turn has angered those lawmakers who supported her, and further encouraged those who opposed her to try to find a way of getting her out of power.
The fourth British prime minister in six years, she was only formerly appointed to the role on September 6.
Already a handful of her lawmakers have said she must go. Rachel Reeves, the finance spokesperson for the opposition Labour Party, said the Conservative government was no longer capable of providing stability.
“The Conservatives have lost all credibility,” she said.
The new finance minister would still deliver a fuller medium-term fiscal plan as scheduled on October 31.
-with AAP
