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The new Chancellor, Jeremy Hunt, says the limited cut in stamp duty in England and Northern Ireland announced in the mini-Budget two weeks ago will continue - although almost every other tax cut announced at the time will be reversed.
In a video statement this morning Hunt says: "We will continue with the abolition of health and social care levy and the stamp duty change, off payroll working reforms, the new VAT-free shopping scheme for non-UK visitors and the freeze on alcohol duty rates."
But every other change put forward by Prime Minister Liz Truss and the former Chancellor Kwarzi Kwarteng is being reversed.
In particular the cutting of the basic rate of income tax to 19 per cent from April 2023 - a flagship policy of Truss in the recent past - will now not happen. The statement says: "The basic rate of income tax will therefore remain at 20 per cent indefinitely. This is worth around £6 billion a year."
Hunt also says a Treasury-led review will take place into how people are helped with energy bills from April next year. The objective, he suggests, is to design a new approach to save taxpayers money while targeting support to those most in need. He adds: "Business support will also go to those most affected and will incentivise energy efficiency."
Hunt claims that no government can control the markets but it can give certainty to the markets about public finances.
He says the plans he unveils today will avoid uncertainty ahead of the full fiscal plan announcement at the end of the month - a plan which is expected to include substantial cuts to public spending.
The Chancellor says in his video statement: "As I promised at the weekend, our priority in making the difficult decisions that lie ahead will always be the most vulnerable and I remain extremely confident about the UK's long-term economic prospects as we deliver our mission to go for growth."
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I have no problem with retaining the 20% tax band but they need to unfreeze and reinstate indexing the Personal Allowances in line with inflation. That way all tax payers are treated fairly.
Totally agree, they also need to get rid of S24 as that's totally unfair as well.
They are moving the deck chairs on the Titanic, Labour are in next.
Sadly I feel you are correct.
How depressing.
Stabilizing the energy costs allowed landlords to work out rational rents or rent increases for bills inclusive tenants. Now we're back to either not including it or randomly guessing a number that may or may not be anywhere close to how much it will actually cost. If landlords can only increase rent once a year, regardless of how much their costs change, surely the same rules should be applied to energy companies.
Personally I thought Kwasi's mini budget was pretty good for anyone with any kind of work ethic and would have resulted in growth. It could have done more at the cliff edges but it was a beacon of light somewhere on the horizon. This morning is just incredibly negative and depressing for anyone who actually bothers going to work or makes any kind of effort.
Have to respectfully disagree. Kwasi's mini-Budget was a disaster. If you're going to come out with £45bn worth of unfunded tax cuts, and not reassure everyone how you were going to pay for this, don't be surprised if the markets panic.
Also, cutting the top rate of tax and corporation tax in a cost-of-living crisis was the totally wrong thing to do, especially the former - it just looked utterly tone-deaf. Plus trickle-down economics just doesn't work, because people with more money tend to keep that money rather than spending it, as ordinary people would.
It was the wrong budget at the wrong time, and their arrogance ultimately was their undoing. This is all on them - the economy wasn't in a great state before, but they took it to precipice for ideological purposes. Totally irresponsible. And for what? They've had to completely U-turn on almost everything.
If Corbyn and co had done what Truss and Kwarteng did, or if Starmer and Reeves did, we'd never hear the end of it. She's trashed her party's reputation - deserved or otherwise - for fiscal competence. And that won't be easily recovered.
Algarve Investor - nothing has been costed or funded rationally since March 2020.
Sunak threw billions around indiscriminately and completely destabilised just about everything.
The furlough scheme was insanity (paying people 80% to not do one job while encouraging them to go and work in a key industry on full pay at the same time).
Rent payment holidays, which have contributed to the number of landlords selling and so increasing rents and the bill for temporary emergency housing.
Introducing low to medium earners to the UC system which has made them realise it often isn't financially beneficial to work full-time.
Kwasi's mini budget wasn't perfect but it did give hope to people who actually pay tax. Employers desperately need an available and motivated workforce. Allowing workers to keep more of their earnings and not rely on benefit top ups is hugely motivational. The 45% is only paid by a tiny number of people so although cutting it was tone deaf it was cheap and would probably have paid for itself many times over if it attracted the brightest and best to set up in the UK. Also the top tax rate was 40% throughout virtually all of the Labour government reign.
Algarve - so they announce something like £120bn of an unfunded energy cap and nobody blinks an eyelid, but £45bn of mainly cancelling future planned rises and the markets go crazy? All off the highest tax base in 70 years?
All at the same time the BoE is raising rates due to externally imported energy inflation thats not controllable by rates.
There's some seriously disjointed thinking going on between the BoE, Gov't and the Mkts and to be honest it's not obvious that its the Govt who has it wrong.
The BoE won't be straight that they're only raising rates because the US is and they need to defend the ccy.
The whole thing is a total mess and now we have Gov't by social media.
Truss is toast. Has there ever been a more humiliating climbdown for a PM? Hunt is, to all intents and purposes, in charge now. Truss has been completely sidelined, in hiding, her plans in tatters.
I would feel sorry for her if she and Kwasi hadn't been so arrogant in their plans, refusing to listen to anyone else, refusing to fund their proposals, refusing to get the OBR involved. The sacking of that experienced Treasury official because he was part of the 'orthodoxy' was also a disaster. The markets are kings, whether you like it or not, and you can't panic them like that and expect to get away with it.
The experiment was an absolute disaster and has made us, and the country, all much poorer. Any support for energy was immediately wiped out. Total chaos.
I can't see how she survives this. She'll be gone in weeks and the pressure on the Tories to hold a GE will grow. But, as all the polls currently point to electoral wipeout, I can't see them calling for one until they absolutely have to.
Completely agree. But GE now or at the end of the term the net result willbe the same. Labour in and this disgrace of a Conservative government out. Landlords get ready for the lynch mob. Thanks boris, thanks Liz and thankyou the idiotic Conservative members that voted for the ridiculous proposals that she campaigned on. Done us all some real good.... not!
Great to see the power of the Market finally recognised and respected.
Wonder how long they'll take to recognise the power of the property market in the face of huge unsatisfied demand from potential tenants but with Landlords only incentivised to pull out of the PRS?
It's time to pay the Piper for all that spending over Covid. Lizz Truss wrong person wrong time.
If Hunt spreads the pain ( tax increases out fairly). Work must pay. Time to find work for idol hands. The sick and elderly excluded of course.
Depends how sick and elderly, many of the 'sick' are in truth only very slightly sick and still capable of at least some work, elderly ? I'm 70 next birthday and still manage physical work part time at least, work pays if you can be bothered to do it
Absolutely Andrew.
Woke making fools out of us.
He's kept the stamp duty the same must be because hes yet to complete on another apartment at The Ocean Complex. That will be next years U-Turn
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