New UK Chancellor Jeremy Hunt has scrapped the vast majority of predecessor Kwasi Kwarteng’s disastrous tax cuts in a desperate attempt to ease financial uncertainty, while controversially slashing the government’s energy support package.
Hunt’s dismissal of Kwarteng’s measures saw an immediate positive impact on the markets, with Sterling rising to 1.3 per cent higher against the dollar at $1.1316, a rise on earlier gains.
He confirmed the scrapping of £32bn of unfunded tax cuts, which includes the £21bn of retreats already announced by Truss on corporation tax. Other plans include scrapping the top rate of income tax, according to figures for the 2026 tax year released by the Treasury.
But in a move that is likely to prove controversial, he is also set to press ahead with plans to scrap the cap on bankers’ bonuses.
In an emergency statement to MPs earlier today, he failed to mention Kwarteng’s plans to do away with EU-based rules that limit bonuses for certain bank staff to 100% of fixed salary or 200 per cent with shareholders approval. As the cost of living crisis looms, it could prove an unpopular and controversial decision with many.
Similarly controversial is Hunt’s announcement that an “energy price guarantee” for households and businesses will last only until April.
The scheme, which will cost £60bn for the first six months, will be redrawn so that it would cost “significantly less”, although it will keep help for those deemed most in need.
“There will be more difficult decisions I’m afraid on tax and spending,” he said.
“The UK will always pay its way.”