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Labour Says Hunt’s Decision To Bring Forward Full Overhaul Of Mini-Budget ‘evidence Of Panic’ – UK Politics Live

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Damian Green suggests Truss will have to become ‘a lot more successful’ to stay on as PMJudging by what Conservative MPs have been telling journalists in private over the last few days, the consensus (but not unanimous) view amongst Tories seems to be that Liz Truss will have to be replaced as party leader before the next election. But very few MPs are saying that in public, and Sky’s Tom Larkin, who is running a spreadsheet of Tories calling for Truss’s resignation, has only got three names on it.

3 MPs now calling for Liz Truss to go. A very bad start to another big week for the PM.

Jamie Wallis the latest with a damning letter telling her to resign. Says she has “fractured our party in a potentially irreparable manner”

— Tom Larkin (@TomLarkinSky) October 16, 2022 Damian Green, the former first secretary of state, was on the Today programme and you would expect him to be on the Larkin list. He is chair of the One Nation Conservatives caucus, the group most horrified by Truss’s experiment with hardline free market ideology. But he insisted that Truss did have the credibility to carry on as PM, despite the fact she is abandoning most of the key tax policies at the heart of her leadership campaign. He explained:

She is a pragmatist – she’s realised that the first budget didn’t work in spectacular fashion, so she’s now taken the sensible view that we will now try something else, and she’s appointed a very sensible chancellor in Jeremy Hunt.

I obviously don’t know what he’s going to say, but clearly what he’s going to do is already beginning to reassure the markets, and I hope will continue to do so afterwards.

That means we can hopefully put the past few weeks behind us and start again.

Green said the public would look “pretty askance” if the Tories staged another leadership election and that what was best for the country was for the government to succeed. Asked if he wanted Truss to lead the party into the next election, Green replied:

Yes, because if she leads us into the next election, that will mean that the next two years have been a lot more successful than the past four weeks have been. That would not only be good for the Conservative party, that would be particularly good for the country as well, so I think everyone would welcome that.

That sounded like Green saying he wanted Truss to stay on as PM until the next election. But in fact what he was actually saying was that Truss would only be able to stay on if her premiership became “a lot more successful”.

Damian Green. Photograph: Dominic Lipinski/PAAccording to the Sun’s Harry Cole, Liz Truss and Jeremy Hunt, her new chancellor, may review the energy price guarantee as part of their bid to reassure the markets that the government has got spending under control.

Manic Monday:

⚡️ Energy Price Guarantee is in play – talk of better targeting in year two⚡️

Likely that stamp duty + nics only thing left intact from mini budget by end of day

Meanwhile two lobbying efforts on Brady today: senior MPs saying change rules but some saying *don’t*

— Harry Cole (@MrHarryCole) October 17, 2022 Truss announced the energy price guarantee two days after becoming prime minister. The move, which will cap the unit price for gas and electricity for families for two years, with the result that on average households will pay £2,500 a year, was widely welcomed, although experts said it was more costly than necessary because help was not targeted on those most in need.

A U-turn on this would be a further humiliation for Truss. Only last week at PMQs Truss was stressing that her plan would protect householders for two years, while Labour’s energy saving proposal only covered six months.

Truss should resign because she has ‘no credibility, no authority’, says LabourLabour has called for Liz Truss’s resignation. In an interview with Sky News, asked if Truss should quit, Pat McFadden, the shadow chief secretary to the Treasury, said:

We think she should go because she has got no credibility, no authority. She caused this damage, she was 100% co-owner of that mini-budget with Kwasi Kwarteng and therefore if she stays in post, why is she staying in post? It can’t be for the interests of the country. This is just the Conservative party looking after itself today and they cannot fix the damage they have caused.

Pat McFadden. Photograph: UK Parliament/Jessica Taylor/PAGeorge Parker, political editor of the Financial Times, reckons that around two-thirds of the tax cuts in the original mini-budget will be abandoned in the update being announced by Jeremy Hunt at 11am.

Jeremy Hunt decides that “salami slicing” the mini-Budget is disastrously failing to calm the markets: big new tax rise and spending cut package now being brought forward to *this morning*. Statement expected at 11am, Commons statement 3.30pm

— George Parker (@GeorgeWParker) October 17, 2022 I’m told the £13bn NIC cut will stay (it has gone through the Commons with Labour support) but everything else is on the table. Can’t see how the 1p income tax cut survives – shelving it indefinitely saves £5bn

— George Parker (@GeorgeWParker) October 17, 2022 Looks like about two-thirds of the £45bn of unfunded tax cuts in Kwarteng’s mini Budget will be binned. NICs and stamp duty the big survivors. Spending cuts still being discussed. Latest on @FT

— George Parker (@GeorgeWParker) October 17, 2022 Sky’s Ed Conway has more on gilt yields this morning.

Commenting on developments in the markets this morning (see 8.27am and 8.31am), Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said:

Today’s developments may hold off a fresh assault on government borrowing costs by the bond vigilantes standing by in the UK gilt market, but it could only be a temporary reprieve.

Trussenomics may have been ripped up and fed to the shredder but the author of the big gamble remains in power, and has the final say on the direction of travel.

Investors are craving more stability but, given the flip-flopping we’ve had so far in her super-short tenure, economic policy uncertainty remains and that’s likely to be the key driver in the bond markets and on foreign exchange desks.

The pound was also up this morning following the announcing that mini-budget 2 has been fast-tracked, PA Media reports. PA says:

Sterling leapt to $1.129 at one stage, having kicked off more nervously, dipping to $1.122 against the greenback in overnight trading ahead of what many have feared would be a testing day on markets.

UK government borrowing costs fall as trading beginsThe initial response from the markets this morning to the news that mini-budget 2 is coming two weeks early was positive, according to Sky’s Paul Kelso.

New: markets open UK 10 year gilt yields first move is … down… That’s what @hmtreasury wanted to see in response to its pre-dawn announcement

— Paul Kelso (@pkelso) October 17, 2022 And this is from Henry Tapper at AgeWage.

And this is from my colleague Graeme Wearden.

The bond market is open … and UK government borrowing costs are falling.

That suggests the City is welcoming Jeremy Hunt’s push to unravel the mini-budget with new tax and spending plans.

The yield, or interest rate, on 30-year government bonds (or gilts) has dropped sharply to 4.55%, down from 4.77% on Friday night.

Yields measure the cost of government borrowing, and fall when bond prices rise (and vice versa).

Graeme has more on his business live blog.

According to the BBC’s political editor, Chris Mason, the statement from Jeremy Hunt today will primarily focus on reversing tax cuts that were included in the original mini-budget. Mason says Hunt is not ready yet to announce decisions on spending.

Labour says Hunt’s decision to bring forward full overhaul of mini-budget ‘evidence of panic’Good morning. Jeremy Hunt declared that he had a “clean slate” to overhaul the disastrous mini-budget after he was appointed chancellor on Friday, and this morning he is going to deploy it, making a statement consigning yet more of the measures announced by his predecessor, Kwasi Kwarteng, to the dustbin.

Announcing Hunt’s appointment, Liz Truss confirmed that the government was going ahead with the corporation tax increase that had been cancelled in the mini-budget. But that was not enough to convince the financial markets that the government had spending under control and on Friday afternoon gilt yields were going up (meaning government borrowing costs were rising). Ministers were braced for more trouble with the opening of the bond markets at 8am this morning.

Instead Hunt has decided to get ahead of events. At 6am this morning the Treasury said he would be making a major statement about tax and spending policy. He will be in the Commons at 3.30pm to give details to MPs, but reassuring the financial markets takes precedence over the convention about big announcements being made in the chamber first, and so Hunt will be releasing the details at 11am.

Labour has called this “evidence of panic”. Pat McFadden, the shadow chief secretary to the Treasury, told the Today programme:

I think it’s evidence of the panic that the government is in and that damage that’s been caused over the past few weeks.

Clearly, ministers are now terrified of market reaction. They’ve concluded that they cannot wait until October 31.

In its own terms, that’s right because the country couldn’t carry on for the next two weeks in the way that we’ve been going, but the key thing is where does this now leave the prime minister? She was elected to lead the Conservative party on the basis of the policies that were announced by the previous chancellor on September 23 [in the mini-budget].

It is hard to know what to call Hunt’s statement, but “revised mini-budget”, or “mini-budget 2” would work as acceptable shorthand. Kwarteng said that he would follow his mini-budget with a “medium-term fiscal plan” that would explain how the tax cuts in the mini-budget would be funded. He was going to set out new fiscal plans, and explain what would happen to spending (not covered in the original statement).

Today Hunt is expected to delay or scrap some of the mini-budget measures that have not already been binned. The cut in the basic rate of income tax by 1p in the pound, that was due to take effect from April next year, will almost certainly be shelved.

But he is also expected to give details of the spending cuts that will be needed to balance the government’s books. (See 8.19am for an update on this point.) He gave a hint of what to expect over the weekend when he said:

We are going to have to take some very difficult decisions both on spending and on tax. Spending is not going to increase by as much as people hoped and … taxes are not going to go down as quickly as people thought and some taxes are going to go up.

Today’s statement will not entirely replace the fiscal plan, due to be published on 31 October. That is still going ahead, and the Treasury confirmed this morning that that is when the Office for Budget Responsibility will publish its economic forecast – its assessment of the credibility of the government’s plans.

Hunt’s move is primarily about assuring the financial markets. But the political markets need reassuring too. The Liz Truss share price hit rock bottom at the weekend and many Conservatives think that, if Tory MPs can agree on a candidate to replace her, she will be out. Today we may get a better sense of whether or not that is imminent.

Here is the agenda for the day.

11am: Jeremy Hunt will making his statement about changes to the mini-budget.

11am: Nicola Sturgeon holds a press conference in Edinburgh as she publishes the latest paper from the Scottish government making the economic case for independence.

2.30pm: Simon Clarke, the levelling up secretary, takes questions in the Commons.

After 3.30pm: Hunt makes a statement to MPs about his mini-budget overhaul.

4.3pm: MPs hold a debate in Westminster Hall on an e-petition signed by more than 600,000 people calling for an early election.

After 5pm: MPs debate the energy prices bill

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