Earlier this month, in an effort to calm the markets and prevent her eventual downfall, Liz Truss sacked Kwasi Kwarteng as chancellor and replaced him with Jeremy Hunt. A few days later, Hunt announced a series of dramatic U-turns on economic policy.
The new chancellor revealed that the government would abandon most of the measures from the “mini-Budget” set out by Kwarteng the previous month, including the proposed cut in the basic rate of income tax, the cut to dividends tax, the repeal of the off-payroll working rules, and the proposed new VAT-free shopping scheme. He also announced that the government’s energy support scheme would be scaled back from next April.
Hunt’s revisions followed the other U-turns that Truss and Kwarteng had already announced: the retention of the 45p income tax rate and a rise in corporation tax from 19 per cent to 25 per cent, which by 2027 will raise more than £18.7bn per year.
Before long, the government had reversed more than £32bn of its initial proposed tax cuts of £45bn. Among the measures that have survived are the reversal of the National Insurance increase (projected to cost the government around £18bn per year) and the cut in stamp duty, though it remains to be seen what policies are left standing once a new PM is in post.