UK: New Chancellor Reverses Tax Cuts, Scales Back Energy Bills Support

Facts

• On Monday, UK chancellor Jeremy Hunt announced a U-turn on almost all of the tax cuts set out in September's mini-budget by ex-chancellor Kwasi Kwarteng. Planned cuts of 1p to income tax and 1.25% to dividend tax have been reversed, while plans to freeze alcohol duties and introduce VAT-free shopping for tourists have also been scrapped.
• The ex-health minister also confirmed that the energy price guarantee - a measure to protect Brits against rising gas and electricity costs - will only remain universal until April. The support was originally intended to last for two years. However, targeted government intervention for the most vulnerable will likely be introduced once the package ends.
• Some measures of PM Liz Truss's flagship economic package that still stand include cuts to stamp duty (a tax on house purchases), the reversal of a proposed rise to National Insurance, and the removal of the cap on bankers' bonuses. Chancellor Hunt said of the historic policy U-turn that economic growth requires "confidence and stability."
• Hunt's predecessor, Kwasi Kwarteng, became the shortest serving chancellor in British history on Friday when he was sacked after just 38 days on the job over the impact of the mini-budget on the markets. Kwarteng's announcements in September prompted a collapse in the value of the pound and the spiraling of borrowing costs, which saw the Bank of England intervene to calm the markets. UK currency and bond yields have shown a partial recovery since Friday.
• Prime Minister Truss has faced extensive criticism over infighting among Conservative party members and turbulent economic policy so far in her short premiership. The PM was absent from the House of Commons chamber on Monday when Hunt faced questions from MPs over governmental U-turns. Though, according to Conservative MP Penny Mordaunt, she had a genuine reason for missing the event.
• Also on Monday, three Conservative MPs broke rank to publicly state that Liz Truss should resign, while Daily Mail reports suggest that over 100 Tory party members are ready to submit letters of no confidence. The news came as UK polls put the Labour Party more than twenty-five points around their Westminster opponents.

Sources: Telegraph, BBC News, Sky News, and Guardian.

Narratives

• Left narrative, as provided by The New Statesman. Despite Liz Truss retaining the title of PM, Hunt is now the de facto leader of the country. The coup against Truss - whose blindly ideological policies and poor leadership have blasted the Tories to electoral oblivion - is almost complete. Conservative infighting, and a blatant disregard for the plight of Brits at a time of heightened instability and rising costs, has made Sir Kier Starmer a PM in waiting.
• Right narrative, as provided by The Telegraph. Although her policies weren't popular, Liz Truss didn't deserve to be hung out to dry by the Conservative party establishment. The government lost the confidence of the Bank of England, the IMF, and of the United States. But these are all institutions that helped create the catastrophic economic conditions inherited by Truss in the first place. The Tories must unite behind their democratically elected leader and support her in making the difficult, perhaps unorthodox, decisions the country needs.

Predictions