Jeremy Hunt says the government will reverse almost all of the tax measures announced in the mini-budget that have not been legislated for so far.
The measures on stamp duty and national insurance will remain.
The chancellor will scrap plans for cuts to dividend tax rates, reversal of off-payroll changes, the new VAT free shopping scheme for non-UK visitors and the freeze on alcohol duty rates.
Jessica Elgot, deputy political editor: This is perhaps the most extraordinary start to any UK premiership in generations. With the prime minister nowhere to be seen, the new chancellor has announced he will reverse almost the entire platform that Liz Truss stood on to win the Conservative leadership – barring the national insurance cut. And there are many more pledges she made in the leadership that will yet come under threat. Truss’s entire raison d’etre as UK prime minister is effectively removed.
Income tax
Hunt says the basic rate of income tax will remain at 20% and do so “indefinitely” until economic circumstances allow it to be cut.
He says it is a “deeply held Conservative value” that people should keep more of the money they earn but that financial markets are “rightly demanding commitment to sustainable public finances”.
He says: “It is not right to borrow to fund this tax cut.”
Taken with keeping the corporation tax rise, and keeping the 45p additional rate, the measures he is announcing will raise £32bn a year.
Elgot: Truss’s main line of attack against her leadership rival Rishi Sunak was that he was the tax-hiking un-Conservative chancellor. But Hunt’s announcement on Monday goes even further than Sunak’s pledge, which was to cut income tax next year. Now Hunt has said that it will remain at 20% indefinitely. For Conservative MPs who backed her over Sunak for those reasons, the prime minister gives them little reason to keep her in post.
Energy price guarantee
The chancellor says the government’s energy price guarantee will be kept for only six months.
Support between now and April will not change, he says, but beyond that “it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices”.
The Treasury will review how energy bills are supported beyond April. Hunt says the objective is to design a new approach that will “cost the taxpayers significantly less than planned while ensuring support for those most in need”. Support for businesses “most affected” will also be put in place.
Elgot: This has been the key talking point for Truss and Conservative MPs during the turmoil, a generous package to protect people from the big price rises this autumn that might have resulted in mass defaults, redundancies and business closures. The only attack line the government was landing on Labour was that the party’s proposal was only for six months. Now Hunt has slashed the generosity of Truss’s promise and leaves her with no political attack lines on her rivals whatsoever – as well as causing a new worry for millions of households.
Public spending
The chancellor concludes by saying that there will be “more difficult decisions” on tax and spending to come.
The government must get debt falling as a percentage of gross domestic product over the medium term, he says.
“Some areas of spending will need to be cut,” he adds.
Elgot: Just a few days ago at prime minister’s questions, Truss said she could “absolutely” guarantee there were no further spending cuts. In her leadership campaign, she even promised defence spending would be increased by billions. That looks in doubt now, which may place the future of her defence secretary, Ben Wallace, in doubt as well. Tory MPs have raised fierce objections to cuts hitting the poorest, cuts to education or health are politically toxic and Truss has close to zero political capital left to push them through.
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