Chancellor Jeremy Hunt has warned of “decisions of eye-watering difficulty” during a statement in the House of Commons.
Speaking in the Commons, he said: “That means decisions of eye-watering difficulty.
"But I give the House and the public this assurance, every single one of those decisions, whether reductions in spending or increases in tax, will be shaped through core compassionate Conservative values that… prioritise the needs of the most vulnerable.”
Mr Hunt told MPs: “Russia’s unforgivable invasion of Ukraine has caused energy and food prices to spike.
Jeremy Hunt
Pool
Jeremy Hunt speaking in the House of Commons
House of Commons
“We cannot control what is happening in the rest of the world, but when the interests of economic stability means the Government needs to change course, we will do so and that is what I have come to the House to announce today.”
Speaking about his meetings on taking the position, he added: “The conclusion I have drawn from those conversations, is that we need to do more, more quickly to give certainty to the markets about our fiscal plans and show through action and not just words that the UK can and always will pay our way in the world.”
Replying to Rachel Reeves, Mr Hunt told the Commons: “Behind the rhetoric, and I was listening very carefully, I don’t think she disagreed with a single one of the decisions that I announced to Parliament and that is important for the country and markets to know.
“And I think there is also agreement on the process of policy making. I support the independence of the Bank of England, introduced by Gordon Brown, and I know she supports the independence of the OBR to set up by George Osborne. The whole Government supports the independence of those two important institutions.
“I fully accept, and I don’t think that I could have been more clear that we have had to change some decisions made in the last few weeks, but what I reject wholeheartedly is her broader narrative about Conservative economic management.”
After defending the Government’s economic record since 2010, Mr Hunt added: “If she is preaching today the need for fiscal credibility, which I warmly welcome, can I just tell her this: the true test will be in two weeks’ time to see whether she supports public spending restraint.
“I’ve shown Conservatives can raise taxes, will she show Labour is willing to restrain spending?”
Earlier on Monday, Mr Hunt also said the Government will scrap plans to reduce the basic rate of income tax from 20 percent to 19 percent in April next year.
While the Government will also ditch plans for new VAT-free shopping for international tourists, Mr Hunt said.
Help with energy bills for all households will only last until April, with Mr Hunt announcing a review to look at a “new approach” to target support at those worst off after that.
In an emergency statement he said: “We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.
“So whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms introduced in 2017 and 2021, the new VAT-free shopping scheme for non-UK visitors or the freeze on alcohol duty rates.”
Government spending in “some areas” will be cut, the Chancellor also confirmed.