“A government that dumps virtually its entire economic slate in the space of a month simply cannot be trusted.”
That was the verdict of UNISON general secretary Christina McAnea today, after the fourth Conservative chancellor this year performed a series of screeching U-turn on his predecessor’s catastrophic ‘mini-budget from just a few weeks ago.
After Kwasi Kwarteng’s tax-cutting ‘fiscal event’ on 23 September triggered panic in the markets, with the pound falling against the dollar and leading, eventually, to his sacking as chancellor by Prime Minister Liz Truss.
In an unprecedented catalogue of U-turns, new chancellor Jeremy Hunt confirmed this morning that he is reversing many of the measures announced – including the planned cut to income tax.
Income tax will stay at 20% indefinitely, instead of being reduced to 19%.
The cap on energy prices is now only guaranteed to April 2023. The mini-budget had announced support for two years, but a Treasury-led review is due to take place in the spring to prioritise those most in need.
Many UNISON members are now facing a financial cliff edge in April, when the price cap is predicted to increase up to £5,000 a year for an average household, with protections only retained for the most vulnerable.
Other proposed tax cuts that have now been abandoned include:
- the cut in dividend tax;
- VAT-free shopping for overseas tourists;
- the freeze on alcohol duty; and
- the easing of the IR35 rules for the self-employed and contractors.
The Treasury expects the reversal of these measures will raise more than £32bn by 2026-27.
Cuts to stamp duty and the reversal of the 1.25 percentage point increase in national insurance contributions will remain, as they were already too progressed in their implementation. The removal of the cap on bankers’ bonuses also remains.
The government has indicated that further “difficult decisions” on tax and spending are due, with an expectation that the government plans to cut £38bn of spending on public services. All ministers are due to meet with the new chancellor this week to decide spending plans.
Ms McAnea said: “Liz Truss promised again and again to shield people from rocketing energy bills, but even that help now lies in tatters. Struggling families will be aghast.
“Threatened spending cuts mean essential services, key workers and the public will pay a heavy price for the government’s reckless – and wholly unnecessary – gamble.’
And the general secretary continued: “The current crisis is entirely of the government’s making. The UK’s reputation on the international stage has been trashed and families’ budgets squeezed like never before.
“This sorry state of affairs must come to an end. The lame duck prime minister has to step aside, and an election called right away to put the country out of its misery. That’s the only way to get the economy back on track.”
The article Tories ‘cannot be trusted’, after screeching economic U-turn first appeared on the UNISON National site.