Jeremy Hunt statement: North East is 'exhausted by financial uncertainty'

As he seeks to restore stability following weeks of turmoil on the financial markets, Mr Hunt used an emergency statement to say the energy price guarantee – which had been due to cap prices for two years – will end in April after which time the Government will look to target help for those most in need.

Read more: Jeremy Hunt announcement - Key points as new Chancellor sets out financial plan

He said he is abandoning plans to cut the basic rate of tax by 1p – which had been due to be brought forward to April – and that it would remain at 20p in the pound until the country can afford to reduce it.

The cut in dividend tax promised by his predecessor will also go, along with VAT-free shopping for overseas tourists, the freeze on alcohol duty, and the easing of the IR35 rules for the self-employed.

But chairites have warned hundreds of thousands of North East families face being cut completely adrift as a result of the changes, and children and young people in the North East – which already has the highest rate of child poverty in the country – are being "left to pay the price of the Government’s economic incompetence".

Mr Hunt said the tax measures alone will bring in £32 billion after economists estimated the Government is facing a £60 billion black hole in the public finances.

In a televised statement, the Chancellor – who only took office on Friday – warned of more “tough” decisions to come.

“Governments cannot eliminate volatility in markets but they can play their part and we will do so,” he said.

Mr Hunt said he will continue with the decision to reverse the increase in national insurance contributions and a reduction in stamp duty, which are already going through Parliament.

However his statement represents an unprecedented overturning of the plans set out just over three weeks ago by Kwasi Kwarteng – with the enthusiastic backing of Liz Truss.

Since the mini-budget package of £45 billion of unfunded tax cuts caused chaos on the markets – as investors took fright over the massive expansion of borrowing – the Prime Minister has been forced into a series of U-turns.

She had already scrapped Mr Kwarteng’s plans to drop the 45p top rate of tax and to freeze corporation tax after the pound plummeted and government borrowing costs soared.

Mr Hunt’s statement sounded the final death knell for her free market experiment – dubbed “Trussonomics” – to kick-start economic growth through a programme of swinging tax cuts and radical de-regulation.

It has left Tory MPs questioning how much longer Ms Truss can remain in office now that the central plank of her campaign in the leadership contest to succeed Boris Johnson has gone.

Read more: Jeremy Hunt to water down energy support as price guarantee set to end in April

After Mr Hunt ditched promised tax cuts, Peter Gibson, Darlington Conservative MP, said as a Tory he "firmly believes in low taxes, allowing people to choose how to spend their own money".

Mr Gibson added: "Our new Chancellor has announced reversal of some of the measures in the recent mini budget which will restore confidence to our markets.

"After some difficult weeks the Conservative Party needs to pull together, particularly for those local councillors and activists in Darlington who have made such progress on transforming our town after 28 years of Labour.

"I hope they will be able to continue on their record of renewal and renaissance in our town."

Mary Kelly Foy, Labour MP for Durham City, said: “This week’s Chancellor Jeremy Hunt has now ripped up virtually all of Liz Truss’s mini-budget including her promise to support households energy bills, slashing it from two years to just six months.

"After four Chancellors in four months, people are rightly asking who voted for this grotesque chaos? The British people did not vote for the Prime Minister’s Kamikaze budget, which crashed the pound in their pocket, threatened their hard-earned pensions, and sent the cost of their mortgage soaring.

"Nor did they vote for the sweeping spending cuts to their already crumbling public services to pay for the chaos the Conservatives ideological incompetence has unleashed on the economy. 

"The damage they have already inflicted will last decades. Our communities and businesses need support and they need it now.

This is a Tory Government without a mandate. Utterly unfit to govern. Out of touch. Out of ideas. A general election must be called.”

Alex Cunningham, Labour MP for Stockton North, said: “After just over three chaotic weeks of Liz Truss’ own making, we’re now back to square one with almost everything that was announced in the mini-budget dumped by the new Chancellor.

“Jeremy Hunt desperately tried to paint a picture of a government that listens and reflects this morning, but the public won’t be fooled: the damage has already been done and is being paid by working people with higher mortgage and borrowing costs.

“The Conservatives have lost all credibility and they know it. Early calls by her own MPs for the Prime Minister to step down for a “unifying figure” are nothing more than a desperate attempt by them to save their own seats."

Andy McDonald, Labour MP for Middlesbrough, said: "The soap opera that is this government continues. But this isn't make-believe, it is reality and people's lives are being ruined by this incompetent and self-serving Government.

"U turn no longer describes the chaos. The current chancellor has all but reversed the whole mini budget. The prime minister has absolutely no credibility. Her position is completely untenable and we need a general election soonest." 

A spokesperson for think-tank IPPR North said: "Whilst chaos reigns in Westminster, here on the ground in the North and across the country, people are exhausted by financial uncertainty. Soaring mortgage rates, rising rents and the erosion of real wages are everyday worries. Too many are struggling to keep their heads above water. 

“It is no surprise that the government has had to reverse swathes of its ‘mini budget’ announcements today. Borrowing to fund tax cuts for the wealthy is not sustainable, fair or how you grow the economy. 

“Despite the government now going into hard reverse on most of its plans, they’re still not clear on whether they can stick to the basics. Promises like the delivery of Northern Powerhouse Rail in full, and investment in our vital public services must not be rolled back. This would be devastating to communities across the North and totally undermine the UK economy.  

“This is the moment for clarity, stability and shoring up commitments that protect the most vulnerable, across the whole country, whilst the wealthiest should step up – we are yet to see such assurances."

Anna Turley, chair of the North East Child Poverty Commission and former Labour MP, said: “The Chancellor spoke about the need to provide economic stability and certainty, but offered absolutely no reassurance on how he will deliver this for the growing number of families across the North East already struggling to afford the basics.

“Hundreds of thousands of low income families across our region – most of whom are either in low paid work or unable to work – still do not have the certainty that the vital support they receive through social security will rise in line with prices.  And now they face the instability of yet another hike in their energy bills from April, on top of the astronomical increases in household costs we’ve seen over the last year.

“The Chancellor must begin to put this right by urgently confirming he will raise benefits like Universal Credit by inflation, otherwise hundreds of thousands of North East families face being cut completely adrift. It is just unimaginable that children and young people in the North East – which already has the highest rate of child poverty in the country – could be left to pay the price of the Government’s economic incompetence.”

John McCabe, Chief Executive, North East England Chamber of Commerce said the "chaos" at the top of government "has to stop", saying: "We cannot wait any longer for government to rise to this enormous challenge of our times."

He added: "We all want to see growth but we need to achieve stability first and the government’s actions in the last few weeks have clearly not helped.

"The latest data from our Quarterly Economic Survey of our members has shown business confidence is extremely shaky – with urgent concerns around inflation and energy costs at the forefront of minds.

"Businesses and households are now facing uncertainty on whether they will be eligible for any support on energy prices in April and what this support will look like.

"We need support to be targeted towards the most vulnerable households and businesses who are already facing rising costs. The Chamber will work with the government and our members on the review process.

"Based on what we know so far, the commitment to the reduction of National Insurance contributions is just about the only positive news.  We’re very concerned about cuts to the essential public services that businesses and households depend on.

"The cost of living crisis and the pressures on business are two sides of the same coin which is why we also need to see an increase to benefits in line with inflation to protect vulnerable households in the North East and prevent further rises in child poverty." 

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