Damage control: New UK Finance Minister Jeremy Hunt warns of tax hikes
Jeremy Hunt, Britain’s new Finance Minister, has warned of tax hikes soon, as he sets off to rectify the “mistakes” made by his short-lived predecessor Kwasi Kwarteng.
“We will have some very difficult decisions ahead,” Hunt told Sky News, warning that “all government departments” faced spending restraint. “And some taxes will not be cut as quickly as people want. Some taxes will go up,” he added.
Hunt made these comments on Saturday while speaking to the media after his appointment as Chancellor of the Exchequer by British Prime Minister Liz Truss.
Last-ditch effort
Tax cuts were the highlight of the budget Kwarteng presented on September 23. But they were financed through billions in further borrowing. The budget caused the financial markets to panic, leading to higher costs for British households.
Also read: UK PM Liz Truss under pressure over tax cuts
Truss on Friday fired Kwarteng—who spent only 38 days in office—but her own position is quite precarious right now. Aghast at the party’s collapse in opinion polls since she replaced Boris Johnson on September 6, senior Conservative MPs are threatening to topple her.
Hunt’s appointment is being seen as a last-ditch effort by Truss to convince the financial markets that her fiscal plans can work. “There were mistakes,” Hunt, a former health and foreign secretary who is seen as a centrist Tory, acknowledged.
A huge gamble
Kwarteng and Truss initially wanted to cut taxes for the highest earners and presented their budget without independent forecasts from the Office for Budget Responsibility, Hunt noted. “The Prime Minister has recognised that. That’s why I’m here,” he said.
Also read: UK PM Liz Truss meets fiscal watchdog in attempt to calm fears
Hunt was a high-profile supporter of Truss’s opponent Rishi Sunak during the leadership campaign, praising his “formidable ability” as chancellor. Hunt has no Treasury experience, but his education business Hotcourses sold for millions of pounds—something he flaunts as proof of his business acumen.
Truss is possibly hoping that bringing a rival into the centre of her government may help appease the Tory lawmakers alarmed and angered by her decision to surround herself with ideological loyalists and the chaos she unleashed on the markets. But Hunt himself ran for the top post earlier this summer. Hence, it will be a tricky task for Truss to pull off.
Poles apart
In his campaign, Hunt had said he would stick with a rise in national insurance (Truss has done the reverse). He has also been an advocate for increasing spending on healthcare and defence. He was ousted from the contest in the first round of voting.
Also read: New UK PM Liz Truss appoints diverse Cabinet, Rishi Sunak allies are out
“I would love to see income tax cut, but it has to be done in a way that is sustainable,” he told The Telegraph (UK) newspaper in July. “It can’t be an electoral bribe, and it depends on growth,” he had added.
(With agency inputs)
