The new chancellor, Jeremy Hunt, has spoken of “mistakes” made by the Liz Truss administration and predicted “difficult decisions ahead”.
Appearing on Sky News on Saturday, in his first interview since replacing Kwasi Kwarteng on Friday, the former health secretary signalled he would have a “clean slate” when it came to the budget, and vowed to be “completely honest with the country” amid rumours that Truss has only weeks left as prime minister.
Hunt, who was parachuted into No 11 in an attempt to restore order to Truss’s ailing government, also suggested that some taxes could rise, as he promised to bring stability to the UK after the disastrous mini-budget.
He told Sky News: “There were mistakes. It was a mistake, when we’re going to be asking for difficult decisions across the board on tax and spending, to cut the rate of tax paid by the very wealthiest.
“It was a mistake to fly blind and to do these forecasts without giving people the confidence of the Office for Budget Responsibility saying that the sums add up.
“The prime minister’s recognised that. That’s why I’m here.”
Hunt is expected to delay a 1p cut in income tax to help plug a black hole in the public finances that had reached £72bn, the Sunday Times reported.
He is expected to announce that plans to reduce the basic rate of income tax next April will be pushed back by a year.
According to the newspaper, the cut to 19% is to take effect at the time previously proposed by Rishi Sunak, the former chancellor, who was Truss’s main leadership rival.
After three weeks of turmoil in the financial markets that followed Kwarteng’s £43bn tax giveaway, Truss ended days of speculation by removing her ally from office and U-turning on her commitment to drop the planned rise in corporation tax from 19% to 25%, a central plank of her leadership campaign.
In a sign of political weakness, Truss turned to Hunt, a Rishi Sunak supporter whom she excluded when she named her cabinet last month.
Hunt, twice a Tory leadership contender and a former foreign secretary, said: “We will have some very difficult decisions ahead. Spending will not rise by as much as people would like and all government departments are going to have to find more efficiencies than they were planning to.”
He did not offer any specific details of what might be contained in the highly anticipated fiscal statement on 31 October, but said: “Some taxes will not be cut as quickly as people want. Some taxes will go up … My priority, our values as a government, will be to protect families, businesses, who are going through a very challenging time.”
But he told ITV’s Robert Peston on Saturday that he would “pretty much” be delivering a “proper” budget.
“We’re going to be talking about tax,” he said. “We’re going to be talking about spending, we’re going to be talking about medium and long-term plans.”
The pressure on household finances shows no sign of letting up as the Bank of England governor, Andrew Bailey, suggested interest rates are likely to rise higher than previously expected.
But the governor offered reassurance that Hunt is more closely aligned with the Bank than his predecessor.
Taking questions in Washington, he said: “I can tell you that I spoke to Jeremy Hunt, the new Chancellor, yesterday. I can tell you that there was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that.”
Hunt denied the UK was returning to an austerity era, but emphasised repeatedly that difficult decisions needed to be made on spending.
“I don’t think we’re talking about austerity in the way we had it in 2010 when I was also in the cabinet. But we are talking about very difficult decisions in budgets where there is already a great deal of pressure.”
Hunt said he backs the “fundamentals” of Truss’s plan for the economy, saying that the UK has to increase its growth rate “if we want well-funded public services like the NHS and to keep taxes low and falling”.
It is still to be determined whether Friday’s embarrassing U-turn will be enough to turn things around for Truss, with multiple reports of Tory MPs and Conservative veterans plotting to force her from office even as cabinet ministers remain publicly loyal.
The Times cited a source apparently close to Kwarteng suggesting he believed Truss may only have bought herself a few more weeks in office, and that “the wagons are still going to circle”.
Kwarteng served as chancellor for 38 days, the second-shortest time in office since 1970.
At a brief news conference in Downing Street on Friday, Truss dismissed calls for her resignation, saying she was “absolutely determined to see through what I have promised”.
Ministers and Truss-supporting Tory MPs have expressed doubts about how long she could survive. The former Conservative leader William Hague said her premiership “hangs by a thread”, while the former chancellor Philip Hammond said the events of the past weeks had wrecked the party’s reputation for fiscal discipline.
Loyal MPs on Friday night urged colleagues to think again about any attempt to oust Truss, who is theoretically safe from a leadership vote for another year under the rules of the backbench 1922 Committee.
