The government’s mini-Budget has essentially been scrapped today by the new chancellor, Jeremy Hunt. It is an attempt to calm the markets and restore government credibility. All tax measures that haven’t already received parliamentary approval – everything other than the stamp duty cut and National Insurance cut – will no longer go ahead. In addition, the energy price guarantee – which capped energy prices for all domestic users – will end in April, when a more targeted scheme will be introduced, as opposed to lasting for two years.
This is the end of Liz Truss’s political project. Financial reality has forced her to jettison each of the promises she made in the leadership campaign over the summer. Whatever mandate she got from that internal Tory party election has evaporated with today’s announcement. The humiliation of appointing a chancellor to gut your own budget makes the Prime Minister’s position unsustainable.
And the political pain is not over: today Hunt laid out his plan on taxes, but the spending cuts are to come. In his statement, the Chancellor said: “There will be more difficult decisions I’m afraid on both tax and spending.” These spending cuts and tax rises will hit people in the middle of a cost-of-living crisis. The question over the summer was how the new prime minister would help people through the winter. A self-imposed financial crisis, precipitating tax rises and public spending cuts, was not meant to be on the cards.
To make matters worse for the Prime Minister, the U-turn on the energy price guarantee removes a key electoral asset for the government. Mere days ago, the PM was goading the opposition for proposing a support package that only lasted until April. Now, her government has done the same.
The timeline for the Prime Minister being ejected from office has now been sped up. Her position is increasingly precarious. The rationale for her premiership and the mandate on which she was elected have been extinguished. And there will be more calls for her to go today.
[See also: Where is Liz Truss?]
Content from our partners
Related
