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Hunt Hints ‘Tax Pains’ Ahead For All

The chancellor said his plan will help get the UK out of a recession as quickly and with as little pain as possible as he also promised help for energy bills not just this winter, but next…reports Asian Lite News

Jeremy Hunt has said everyone is going to be paying higher taxes but those who earn the most will have to make larger sacrifices.

The chancellor said during Thursday’s autumn statement he “will be asking everyone for sacrifices” but recognises there is “only so much we can ask” from people on the lowest incomes.

“That will be reflected in the decisions that I take, that’s important because Britain is a decent country, a fair country, a compassionate country,” Mr Hunt said.

“We’re all going to be paying a bit more tax, I’m afraid.”

Ministers are understood to be considering lowering the threshold at which employees pay the highest 45p rate of income tax from £150,000 to £125,000, the Sunday Telegraph reports.

Nurses across the UK this week voted to go on strike for the first time, likely next month, as they demand a 17% pay rise.

Hunt, who was health secretary when junior doctors went on strike for the first time in 2015, said he was “very conscious” of nurses’ concerns and understands they are asking for that above-inflation increase because of the impact of inflation on their pay packet.

But he said: “I think we have to recognise a difficult truth that if we gave everyone inflation-proof pay rises, inflation would stay. We wouldn’t bring down inflation.

“And that’s why, you know, I’m not pretending there aren’t some difficult decisions. The way through this is to bring down inflation as quickly as possible, because that is the root cause of your concern, your anger, your frustration, that your pay isn’t going as far as it might.”

Hunt promised the autumn statement will “not just be bad news” but said he believes the public recognises “if you want to give people confidence about the future you have to be honest about the present”.

He said his plan will be both short and long-term and will bring down inflation, control high energy prices and “get our way back to growing, healthily”.

The chancellor said his plan will help get the UK out of a recession as quickly and with as little pain as possible as he also promised help for energy bills not just this winter, but next.

But he also said spending cuts from government departments will be needed and hinted no more funding will be given to the NHS.

He said the health service’s funding is already going up but the government needs to do “everything we can to find efficiencies” within the NHS.

Hunt, asked if the NHS is on the brink of collapse, admitted doctors and nurses “on the frontline are frankly under unbearable pressure so I do recognise the picture”.

He added that public services need a strong economy but that applies the other way around as well.

And he said the NHS can help get the UK out of the current economic difficulties, such as helping the growing number of people out of work due to long-term sickness.

Simon Clarke, the former levelling up secretary under Liz Truss, told Sophy Ridge on Sunday he would rather see public spending cuts than tax rises in the fiscal statement.

He said: “I would strongly urge that the great balance of this statement should come from spending reductions because I really do think that there is an issue with our raising the burden of taxation on Britain at this time.”

Clarke added that government spending has risen “substantially” over the past decade so there is “potential” to make savings that “did not damage public services”.

https://www.youtube.com/watch?v=Npmjlue23TA

Labour’s shadow chancellor Rachel Reeves said the chancellor could still make “fair choices” in the autumn statement that do not place the burden on the public by closing tax loopholes and backdating the windfall tax on energy companies’ profits to January and extending it by two years.

She said the windfall tax extension could raise an additional £50bn.

Reeves also called for a general election as she said Prime Minister Rishi Sunak has “no mandate for the cuts and tax increases” because he was not voted in by the country, but by Conservative MPs.

ALSO READ-Hunt warns of ‘tough road ahead’ for UK economy

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Hunt junks ‘Trussonomics’

The chancellor of the exchequer said no government could control markets — but stressed his action would give certainty over public finances and help secure growth…reports Asian Lite News

The British government on Monday axed almost all of its debt-fuelled tax cuts unveiled last month to avert fresh markets chaos, in a humiliating climbdown for embattled Prime Minister Liz Truss.

The shock move by new finance chief Jeremy Hunt, parachuted into the job on Friday to replace sacked Kwasi Kwarteng, leaves Truss’ position in a precarious state after a series of embarrassing U-turns.

The chancellor of the exchequer said no government could control markets — but stressed his action would give certainty over public finances and help secure growth.

“The most important objective for our country right now is stability,” he added in a contrite statement, ahead of setting out further details in parliament later Monday.

Hunt scrapped plans to axe the lowest rate of income tax, and curbed the government’s flagship energy price freeze — pulling the plug in April instead of late 2024.

A proposed reduction in shareholder dividend tax was also binned, along with planned tax-free shopping for tourists and a freeze on alcohol duty.

Truss fired her close friend Kwarteng on Friday after their recent tax-slashing budget sparked markets chaos — fuelling intense speculation over her political future one month after taking office.

His action sent the British pound jumping to $1.1346, while bond yields dipped.

Truss had already staged two embarrassing budget U-turns, scrapping tax cuts for the richest earners and on company profits.

“All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.”

He met over the weekend with the governor of the Bank of England, Andrew Bailey, and the head of the Debt Management Office to discuss his plans.

The budget furore has reportedly sparked a plot to oust the prime minister.

“That sound you can hear is the death knell for Trussonomics, with the vast majority of her tax-cutting plans now consigned to the bin,” said Laura Suter, head of personal finance at stockbroker AJ Bell.

In two weeks’ time, Hunt will unveil his medium-term fiscal plan alongside independent economic forecasts from the Office for Budget Responsibility.

“All the chancellor’s statement underlines is that the damage has been done,” said its shadow finance minister Rachel Reeves.

On September 23, the government unveiled a 45-billion-pound tax cut package, the largest since 1972, to boost economic growth, but it threw financial markets into turmoil as the British pound collapsed to record lows and government borrowing costs rose sharply.

Investors are concerned that the tax-cutting measures will ramp up public borrowing, bring serious fiscal uncertainty and push up already high inflation.

To calm markets, the Bank of England announced temporary purchases of long-dated UK government bonds in the end of September, and later stepped up the measures, increasing the maximum size of the auctions and expanding bond buying to include index-linked gilts.

The central bank on Monday confirmed that it terminated these operations and ceased all bond purchases on Friday, noting that “these operations have enabled a significant increase in the resilience of the sector”.

Rishi Sunak vindicated

Rishi Sunak was vindicated in dramatic fashion on Monday when Britain’s new chancellor, Jeremy Hunt, ripped up the economic policies on which Liz Truss was elected Tory party leader and prime minister.

As an increasing number of Tory MPs came out publicly for Truss to step down immediately, Hunt made an emergency statement and later addressed the Commons in an attempt to calm the markets.

Hunt, who took over when Kwasi Kwarteng was sacked, said in his statement: “We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.”

In a tweet, Truss gave no indication she accepted blame for pursuing unfunded tax cuts – and not taking heed of the warnings Rishi had repeatedly given that she was “divorced from reality”.

The “Prime Minister In Name Only” (PINO), as Truss is now being called, said: “The British people rightly want stability, which is why we are addressing the serious challenges we face in worsening economic conditions. We have taken action to chart a new course for growth that supports and delivers for people across the United Kingdom.”

The BBC’s political editor, Faisal Islam, commented: “We have witnessed an utterly extraordinary un-budget, perhaps marking the biggest U-turn in British economic history….We may need new terminology. ‘U-turn’ suggests a controlled manoeuvre. This is like a plane trying to do the jet engine equivalent of a handbrake turn.”

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Hunt vows to win back financial market trust

Truss — who won the leadership of the Conservative Party barely a month ago after promising to slash taxes — fired Kwarteng on Friday and has ditched key parts of the programme they agreed together…reports Asian Lite News

Britain’s new Finance Minister Jeremy Hunt promised to win back the country’s economic credibility by accounting for every penny of the government’s tax and spending plans, while insisting that his boss Prime Minister Liz Truss remained in overall charge.

Truss appointed Hunt on Friday in an attempt to rescue her leadership as confidence in her ability to run the country drained away within both her own Conservative Party and international financial markets.

Investors have sold British government bonds heavily since September 23 when Mr. Hunt’s predecessor, Kwasi Kwarteng, announced a string of unfunded tax cuts without publishing a set of independent economic forecasts.

The knock on effects forced the Bank of England to make an emergency intervention to protect pension funds and drove up mortgage costs — adding to the squeeze on Britons’ finances.

“No government can control the markets. No Chancellor should seek to do that,” Mr. Hunt told BBC television in an interview broadcast on Sunday.

“There is one thing we can do and that’s what I’m going to do, which is to show the markets, the world, indeed people watching at home, that we can properly account for every penny of our tax and spending plans.”

Britain’s economy is at risk of going into recession at the same time as the Bank of England is raising interest rates to control soaring inflation. Bank of England Governor Andrew Bailey said on Saturday he thought a big increase in interest rates would be needed in early November.

Truss — who won the leadership of the Conservative Party barely a month ago after promising to slash taxes — fired Kwarteng on Friday and has ditched key parts of the programme they agreed together.

The chaos has fuelled discontent in the governing party, which before Friday was already splintered and falling far behind the Opposition Labour Party in opinion polls. Sunday’s newspapers were rife with stories of plans to replace Truss.

Even US President Joe Biden criticised Truss’s original economic plan as a mistake.

“I think that the idea of cutting taxes on the super wealthy at a time when — anyway, I just think — I disagreed with the policy, but that’s up to Great Britain to make that judgment, not me,” he said.

After effectively dismantling Truss’s gamble that tax cuts would spur increased growth and pay for public spending, Hunt has said he will go further including imposing tighter spending controls and some tax rises.

“I’m going to be asking every government department to find further efficiency savings,” he said, adding that while he wanted to keep other tax cuts the government has promised, he ruled nothing out in his drive to balance the books.

He said he would set out the details in a fiscal statement already scheduled for October 31.

ALSO READ-Are lawmakers plan to oust Truss?

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Hunt admits to ‘mistakes’ in budget

Jeremy Hunt

New Chancellor Jeremy Hunt indicated he would be tearing up the strategy that brought Truss to 10 Downing Street…reports Asian Lite News

Britain’s new finance minister, Jeremy Hunt, on Saturday warned of looming tax hikes as he admitted to “mistakes” made in a disastrous budget that still threatens to bring down Prime Minister Liz Truss.

New Chancellor Jeremy Hunt indicated he would be tearing up the strategy that brought Truss to 10 Downing Street.

“There were mistakes,” acknowledged Hunt, a former foreign secretary who is seen as a Tory centrist. He said former finance minister Kwasi Kwarteng and Liz Truss had erred in trying to cut taxes for the highest earners, and in presenting their budget without independent forecasts from the Office for Budget Responsibility.

“The prime minister’s recognised that, that’s why I’m here,” Hunt said.

Speaking to the BBC, Hunt signalled a big shift away from the economic policies of Truss and Kwarteng.

While he did not say where taxes could rise or public spending be reduced, Hunt did not rule out cuts to NHS spending or rowing back on Truss’s pledge to increase defence spending to 3% of GDP.

The chancellor, a Rishi Sunak supporter in the leadership contest, said the government needed to “show the world we have a plan that adds up financially”.

Truss, prime minister for just 39 days, is already facing pressure from within her party following September’s mini-budget, which included £45bn worth of tax cuts and sparked turbulence in the financial markets.

Hunt said Truss’s administration had made “mistakes”, adding: “It was wrong to cut the top rate of tax for the very highest earners at a time where we’re going to have to be asking for sacrifices from everyone to get through a very difficult period.”

And he also said it was wrong to “fly blind” and announce the mini-budget without a forecast from the Office for Budget Responsibility (OBR).

He said both of these were now in the process of “being put right”.

“Taxes are not going to come down by as much as people hoped, and some taxes will have to go up,” he said. “I’m going to be asking all government departments to find additional efficiency savings.”

According to media reports, in one of his first acts on taking office, hunt spoke to Bank of England governor Andrew Bailey, who has had to stage costly interventions to calm febrile bond markets.

Tax cuts were the centrepiece of the ill-starred budget announced by Kwarteng and Truss.

But they were financed through billions in more borrowing, causing panic on financial markets, which has fed into higher costs for British households in the middle of a cost-of-living crisis.

“We will have some very difficult decisions ahead,” Hunt said, warning that “all government departments” face spending restraint.

“And some taxes will not be cut as quickly as people want. Some taxes will go up,” he indicated.

Hunt confirmed he would deliver a new fiscal statement on October 31, telling BBC radio he had a “clean slate” to start afresh — underlining that Truss has considerably weakened her own position after coming to power on a hard-charging platform of reform.

According to British media reports, Liz Truss is desperately clinging to her chair. In a bid to survive the political crisis, Truss has ripped up the mini-budget that caused turmoil on financial markets and replaced Kwasi Kwarteng as chancellor with Conservative leader Jeremy Hunt. The cost of government borrowing rose and the pound fell further following her press conference announcing the changes.

The estimated GBP 45 billion worth of tax cuts without a detailed funding plan to back them up were seen as disastrous for the UK economy at a time when inflation was already soaring.

Meanwhile, Bank of England Governor Andrew Bailey said there had been a “meeting of minds” when he held discussions with Hunt on Friday.

Bailey made the comments after hinting at impending fresh interest rate hikes.

“Inflationary pressures” meant a “stronger response” could be needed from the Bank than previously thought in August, the governor said.

And the Institute for Fiscal Studies warned Mr Hunt had inherited a “difficult and tricky situation”, with the public finances “very stretched”.

The think tank’s director Paul Johnson said: “I think we’re going to see even further reversal of tax cuts that we’ve had, and in addition probably some very tight spending rounds.”

Despite Hunt’s appointment, Truss and her premiership remain under significant pressure.

One Tory MP described the party as being in a “state of despair,” but Truss supporter Christopher Chope said “time will tell” if she had done enough to secure her position.

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