Chancellor Jeremy Hunt Emergency Statement

In an Emergency Statement on Monday (17th October 2022) morning, Jeremy Hunt announced he is reversing "almost all" of the tax cuts announced in his predecessor's mini-budget and is scaling back support on energy bills.  Mr Hunt said, “The government has today decided to make further changes to the mini-budget, and to reduce unhelpful speculation about what they are, we've decided to announce these ahead of the medium-term fiscal plan, which happens in two weeks”.

In his statement he announced:

• The priority will remain the most vulnerable
• The basic rate of income tax will remain at 20p indefinitely - instead of being reduced to 19p
• The government will not proceed with corporation tax cut
• The government will no longer cut dividend tax and will abandon IR35 changes
• The cap on energy prices charged to households is now only guaranteed until April next year, but will then be reviewed.  The Energy Bill Relief Scheme for business will also stay in place until April.  A Treasury-led review will be launched to consider how to support households and businesses with energy bills after April 2023.
• But the cuts to stamp duty and National Insurance remain in place
• He said his announcement - bringing forward measures from an economic plan on 31 October - is designed to calm financial turmoil following the mini-budget

Following the Emergency Statement, the Chancellor updated MPs in the House of Commons and highlighted that the government has to do what is necessary for economic stability. He assured MPs that every single one of his decisions "will be shaped by core compassionate Conservative values" that "will prioritise the needs of the most vulnerable".  He said that the measures he's announced today will save £37bn per year.

On income tax, the Chancellor said that the government is currently committed to cutting the basic rate of income tax to 19%.  However, at a time when markets are asking serious questions, the government cannot afford to permanently increase borrowing.  The rate will remain at 20p until economic conditions allow for a change - and a change is affordable, he said. 

He added that he will publish the government’s fiscal rules alongside an Office for Budget Responsibility forecast - and further measures - on 31 October.

He also announced that the government will create a new economic advisory panel to provide expert advice.

In related news:

• Mark Carney, former governor of the Bank of England, told the Financial Times in an interview published on October 14th: “Put it this way, in 2016 the British economy was 90% the size of Germany’s.  Now it is less than 70%.”
• Tesco chair John Allan has told the BBC’s Laura Kuenssberg that the Conservative Party  has no plan for growth, unlike Labour – even though Kwasi Kwarteng’s emergency budget was officially called a statement on the government’s Growth Plan.
• Tory Peer and former Marks & Spencer chair Stuart Rose told the FT Liz Truss was a 'busted flush'