Shell-shocked Liz Truss sits motionless as Jeremy Hunt fillets her £32bn tax giveaway in brutal Commons humiliation
SHELL-SHOCKED Liz Truss sat motionless as Jeremy Hunt filleted her £32 billion tax giveaway in a brutal Commons humiliation.
It followed an early morning statement in which the new Chancellor jettisoned the PM’s disastrous mini-Budget and scrapped the Government’s pledge to freeze everyone’s energy bills for two years.
In a bid to soothe weeks of market turmoil, only cuts to National Insurance and Stamp Duty remained from Truss and ex-Chancellor Kwasi Kwarteng’s package unveiled just 24 days ago.
The broken PM sat in silence flanking her Chancellor as the plans were announced to Parliament, with a repetitive blink her only outward display of emotion.
Earlier in the Commons, Penny Mordaunt was forced to deny that her boss was hiding “under a desk” in No10 as she stood in for the PM to answer a question.
Mr Hunt did not commit to protecting the pensions triple lock — and even suggested a further windfall tax could come on oil and gas producers in another blow to Truss’s promises.
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And he warned of more pain to come saying the Government faces decisions of “eye-watering difficulty” after a stark warning of a £72billion blackhole in the public finances.
The Pound rallied by more than two per cent to a 1.14 against the dollar and the cost of long term government borrowing fell — but Liz Truss’s authority lay in tatters.
In a further screeching U-turn Mr Hunt announced biting cuts to government departments will be drawn up this week — less than a week after the Truss promised public spending would not fall.
After ripping up plans not to hike corporation tax next year, Mr Hunt shocked Tories by boasting to MPs that he had “shown Conservatives can raise taxes”.
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It was an abject humiliation for a PM who spent the summer campaigning to cut them as her flagship leadership promise.
Last night MPs openly questioned how long she can stay in No10 after being so weakened.
Cabinet ministers described Mr Hunt’s take over of the Treasury as “a coup”.
One senior minister suggested “the caretaker PM is already in place, he just lives in No11.”
Mr Hunt told MPs: “We’ve decided to make further changes to the mini-Budget immediately rather than waiting until the medium-term fiscal plan in two weeks’ time in order to reduce unhelpful speculation about those plans.
“We’ve decided on the changes to support confidence and stability.”
Mr Hunt also refused to guarantee defence spending will rise to two per cent of GDP like Ms Truss pledged in her leadership campaign.
He told MPs: “Any increase in defence spending has to be an increase that we can sustain over very many years.”
His moves came as the Treasury devoted all its efforts to the Halloween forecast on the fiscal state of the nation.
The Office of Budget Responsibility is still working on their assessment, with details of cuts to be presented to them on Friday, so they can factor in the savings.
It is hoped in Downing Street that if the OBR present a smaller-than-feared blackhole, the Bank of England will not have to hike mortgage rates as dramatically as feared on November 3.
But last night MPs and experts warned that a further £40billion will be needed in cuts or tax hikes to balance the books.
The remarkable turnaround began on Sunday afternoon when the PM and her new Chancellor held private talks at Chequers where they agreed to gut almost all of the doomed mini-Budget.
After squaring the Bank of England and Cabinet, they wasted no time trying to rescue the Government’s reputation with markets.
At 6am, the Treasury announced that Mr Hunt would make a statement within hours.
It was billed as an announcement to fast-track parts of the October 31 strategy.
But just after 11am Mr Hunt shocked Westminster and beyond by chucking the central planks of the three-week-old mini-Budget on to the scrapheap.
He delayed the 1p income tax cut “indefinitely” to save £6billion a year; ditched the VAT holiday for foreign tourists worth £2billion and binned the freeze on booze duties for £600million.
Reforms for the self employed to IR-35 regulations saved the Treasury another £2billion a year.
Combined with last week’s U-turns on Corporation Tax and the 45p rate, the Chancellor said the moves would save £31billion.
Continuing to unpick Ms Truss’ cash splurge, he announced the Energy Price Guarantee — which caps the typical household bill at £2,500 — would end next April rather than in October 2024 pending a government review.
Prudent Mr Hunt also warned Cabinet colleagues will have to tighten their belts as departments “redouble efforts to find savings”.
He received a warm reception from Tory MPs as he fielded questions from them for over an hour in a behind-closed-doors meeting.
One backbencher present said the Chancellor had restored “fiscal sanity”.
But the right-wing think tanks once revered by Ms Truss recoiled from her abandoning her tax-cutting agenda.
The TaxPayer’s Alliance blasted: “The light at the end of the economic tunnel has now been extinguished by this Chancellor”.
Sir Keir Starmer had earlier tried to force the PM to face the wrath of MPs by asking her to explain to the Commons why she had fired Kwasi Kwarteng.
But Ms Truss ducked the grilling, sending leadership rival Penny Mordaunt out in her place.
The Commons leader faced fury over the PM’s absence and had to deny that her boss was hiding “under a desk” at No10.
In a sign that Mr Hunt had temporarily blunted a backbench rebellion, Tory MPs gave him a public show of support in the Commons as he fielded questions for two hours.
Mel Stride, a chief supporter of former Chancellor Rishi Sunak said Mr Hunt had “steadied the markets” with his “frank and bold announcement”.
Fellow Rishi-backing Conservatives including Matt Hancock and Amdrew Mitchell also gave Mr Hunt’s measures their seal of approval.
But Tory MP Sir Edward Leigh warned that Britain must not become a “second rate economy” with soaring taxes.
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Shadow Chancellor Rachel Reeves said the Tories had wrecked the economy over the past 12 years, raging: “They’ve set fire to everything.”
But Mr Hunt slammed Labour for crippling the economy during their tenure. He said: “I’ve shown Conservatives can raise taxes. Will she show Labour are willing to restrain spending.”