More difficult decisions to come, says Chancellor, as growth plan ditched

The UK government will reverse almost all the tax cuts it announced last month, Chancellor Jeremy Hunt has said.

He also announced that beyond April support for household and business energy bills would be reviewed.

Mr Hunt said economic growth required "confidence and stability", adding that the UK "will always pay its way".

But the announcement means that the chancellor has unwound almost all of Prime Minister Liz Truss's key measures announced in September's mini-budget.

Among the measures to be reversed are plans to cut the basic rate of income tax from 20p to 19p from April.

Mr Hunt said the rate would remain at 20p "indefinitely until economic circumstances allow for it to be cut".

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The chancellor said it was "a deeply held Conservative value" that people should keep more of the money they earn.

"But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut," he added.

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However, Mr Hunt said the cuts to stamp duty paid on house purchases and the scrapping of the National Insurance rise would continue.

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The plan to remove the cap on bankers' bonuses is another of the mini-budget policies to survive.

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Other measures to be axed include:

? Cuts to dividend tax rates

? The reversal of off-payroll working reforms introduced in 2018 and 2021

? VAT-free shopping for international tourists

? The freeze on alcohol duty rates

Mr Hunt said the measures, including the previously announced freeze on corporation tax and keeping the top rate of income tax, would raise around ￡32bn a year.

Last month, the government announced it would cap the typical household energy bill at ￡2,500 for two years.

However, Mr Hunt said this pledge would now only last until April and beyond then there would be a new approach "that will cost the taxpayer significantly less than planned".

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Responding to the Chancellor’s statement, Charandeep Singh BEM, Deputy Chief Executive, Scottish Chambers of Commerce, said:?

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“Today’s plans have effectively pressed the economic reset button following weeks of turmoil and uncertainty. Businesses now need clear line of sight of the UK Government’s economic plans. It must be clear on how businesses will be supported to survive through the difficult months ahead and what measures will be put in place to support long-term growth.

“Our economic research continues to show that energy costs are the single biggest worry for businesses right now and the decision to roll back on the energy support for households and firms from next April is a major concern. We would urge the Chancellor to engage with the business community urgently and provide clarity on the proposed targeted support beyond April.

“The Chancellor clearly has a lot to balance. As well as restoring market stability, the UK Government must not lose sight of other policy levers that must be pulled to support business. Chief amongst them is dealing with labour market shortages which are impacting businesses across the UK, as well as restoring business and investor confidence.”