Difficult decisions on tax and spending to come, warns new Chancellor

The new Chancellor has criticised the “mistakes” of the Liz Truss administration in his first interview since taking the job, as he warned of “difficult decisions” to come on tax and spending.

Jeremy Hunt, who was parachuted into Number 11 to replace Kwasi Kwarteng in a bid to restore order to Ms Truss’s ailing administration, also suggested that some taxes could rise as he promised to bring stability to the country in the wake of the disastrous mini-budget.

It comes as Ms Truss’s premiership remains in peril this weekend after she sacked Mr Kwarteng and ditched a major chunk of her mini-budget in an extraordinary gamble to stay in power.

After three weeks of turmoil on the financial markets in the wake of Mr Kwarteng’s £43 billion mini-budget tax giveaway, Ms Truss ended days of frenzied speculation by forcing her friend from office and U-turning on her commitment to drop the planned rise in corporation tax from 19% to 25%, a central plank of her leadership campaign.

Mr Hunt, twice a Tory leadership contender and a former foreign secretary, repeatedly insisted on Saturday morning that “difficult” decisions were going to be made, but denied that the UK was heading towards another era of austerity.

He also insisted that Ms Truss’s growth plan is “absolutely right”.

“It’s a big honour to do the job that I’ve been asked to do by the Prime Minister but I want to be honest with people: we have some very difficult decisions ahead,” he told Sky News.

“The last few weeks have been very tough but the context of course is coming out of a pandemic and a cost-of-living crisis.

“And the thing that people want, markets want, the country needs now, is stability. No Chancellor can control the markets.

“But what I can do is show that we can pay for our tax and spending plans, and that is going to need some very difficult decisions on both spending and tax.”

He admitted that Ms Truss had made mistakes, but positioned himself as a safe pair of hands able to help fix the political and economic crisis facing the UK.

“It was a mistake when we’re going to be asking for difficult decisions across the board on tax and spending to cut the rate of tax paid by the very wealthiest.

“It was a mistake to fly blind and to do these forecasts without giving people the confidence of the Office of Budget Responsibility saying that the sums add up.”

“The Prime Minister’s recognised that, that’s why I’m here.”

But while Mr Hunt did not offer any specific details of what might be contained in the highly anticipated fiscal statement on October 31, he did signal that tax rises could be coming.

“Spending will not rise by as much as people would like and all Government departments are going to have to find more efficiencies than they were planning to.”

“And some taxes will not be cut as quickly as people want.

“Some taxes will go up. So it’s going to be difficult.”

At a brief news conference in Downing Street on Friday, Ms Truss had dismissed calls for her resignation, saying she is “absolutely determined to see through what I have promised”.

“It is clear that parts of our mini-budget went further and faster than markets were expecting, so the way we are delivering our mission right now has to change,” she said.

“We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.”

It is still to be determined whether Friday’s embarrassing U-turn will be enough to turn things around, with multiple reports of Tory MPs and Conservative grandees plotting moves to force her from office even as Cabinet ministers remained publicly loyal to the Prime Minister.

The Times newspaper even cited a source apparently close to Mr Kwarteng suggesting that Ms Truss may only have bought herself a few more weeks in office.

To many observers, it appeared that the end could be nigh for the Prime Minister after only a few weeks in the job.

Former Conservative leader Lord Hague warned that Ms Truss’s premiership “hangs by a thread”, while Conservative former chancellor Lord Hammond said the events of the past weeks had wrecked the party’s reputation for fiscal discipline.

Loyal MPs on Friday night were urging party colleagues to think again about any bid to oust Ms Truss, who is theoretically safe from a leadership vote for another year under the rules of the backbench 1922 Committee.

Welsh Secretary Sir Robert Buckland, appearing on BBC Radio 4’s Any Questions programme, warned: “I think if we start with gay abandon, throwing another prime minister to the wolves, we’re going to be faced with more delay, more debate, more instability.”

But even the staunchly loyal MP Sir Christopher Chope had some harsh words for his party leader, after defending her on Thursday and ruling out any reversal.

“I feel let down, very badly let down. And I expressed disbelief at what I heard today because it’s totally inconsistent with everything that the Prime Minister stood for when she was elected,” he told BBC Newsnight.