London Daily

Focus on the big picture.
Friday, Sep 04, 2026

Chancellor warns of tax rises and squeeze on spending

Chancellor warns of tax rises and squeeze on spending

Difficult decisions will be needed "across the board" on tax and spending, the new chancellor has told the BBC.

Speaking in his first interviews since replacing Kwasi Kwarteng, Jeremy Hunt said some taxes will go up, while government spending may need to fall.

Cutting the top rate of tax and not independently costing measures were mistakes being "put right", he added.

He also insisted he had a "clean slate" after Liz Truss sacked Mr Kwarteng on Friday.

Mr Hunt, a former foreign secretary who had not been part of Ms Truss's cabinet, was made chancellor on Friday as the prime minister sought to restore confidence in her government.

In another dramatic day in Westminster, the PM also scrapped the plan to freeze corporation tax - set out in the 23 September mini-budget - in another major U-turn.

Speaking to the BBC, Mr Hunt signalled a big shift away from the economic policies of Ms Truss and Mr Kwarteng.

"Taxes are not going to come down by as much as people hoped, and some taxes will have to go up," he said. "I'm going to be asking all government departments to find additional efficiency savings."

While he did not say where taxes could rise or public spending be reduced, Mr Hunt did not rule out cuts to NHS spending or rowing back on Ms Truss's pledge to increase defence spending to 3% of GDP.

The chancellor, a Rishi Sunak supporter in the leadership contest, said the government needed to "show the world we have a plan that adds up financially".

Ms Truss, prime minister for just 39 days, is already facing pressure from within her party following September's mini-budget, which included £45bn worth of tax cuts and sparked turbulence in the financial markets.

Mr Hunt said Ms Truss's administration had made "mistakes", adding: "It was wrong to cut the top rate of tax for the very highest earners at a time where we're going to have to be asking for sacrifices from everyone to get through a very difficult period."

And he also said it was wrong to "fly blind" and announce the mini-budget without a forecast from the Office for Budget Responsibility (OBR).

He said both of these were now in the process of "being put right".

The chancellor made a series of other points about the government's mini-budget and discussed possible plans for his new role in his interviews with the BBC:

*  He said he hoped to keep the 1% cut to the basic rate of income tax, but that no decisions had yet been made

*  He said he would keep the energy price guarantee and praised the former chancellor for implementing it

*  He is asking government departments to find "efficiencies", meaning possible cuts to spending

*  He also refused to commit to a pledge by Boris Johnson's government to raise benefits in line with inflation, though he said he was mindful of the needs of the most vulnerable

Meanwhile, Bank of England Governor Andrew Bailey said there had been a "meeting of minds" when he held discussions with Mr Hunt on Friday.

Mr Bailey made the comments after hinting at impending fresh interest rate hikes.

"Inflationary pressures" meant a "stronger response" could be needed from the Bank than previously thought in August, the governor said.

And the Institute for Fiscal Studies warned Mr Hunt had inherited a "difficult and tricky situation", with the public finances "very stretched".

The think tank's director Paul Johnson said: "I think we're going to see even further reversal of tax cuts that we've had, and in addition probably some very tight spending rounds."

Jeremy Hunt arriving at the BBC on Saturday


Despite Mr Hunt's appointment, Ms Truss and her premiership remain under significant pressure.

One Tory MP described the party as being in a "state of despair," but Truss supporter Christopher Chope said "time will tell" if she had done enough to secure her position.

Labour leader Sir Keir Starmer accused the prime minister of "grotesque chaos" following the sacking of Mr Kwarteng and called for a general election.

During a speech in Barnsley a day after the upheaval in Westminster, Sir Keir said Ms Truss was "clinging on", arguing that there was "no historical precedent" for the current situation facing her government.

But Mr Hunt rejected suggestions of a general election, saying the country needs "stability".


Watch: Chancellor admits mistakes made and some taxes will rise


Newsletter

Related Articles

0:00
0:00
Close
Scottish Tech Company PureLifi Enters Administration With More Than 40 Job Losses
Scottish Government Names Alyn Smith Innovation and Education Minister
Green Party Co-Leader Zack Polanski to Contest By-Election for Keir Starmer’s Former Seat
Palestine Action Activists Appeal Terrorism-Related Prison Sentences
PwC Report Highlights Persistent Regional Spending-Power Divide Across Britain
UK Names Hundreds of Employers for Minimum Wage Violations
UK Commits £400 Million to International Tropical Forest Fund
UK Extends £2 Bus Fare Cap Across England Through 2027
UK Warns Travellers as US-Iran Tensions Disrupt Middle East Security and Shipping
Andy Burnham Faces Kemi Badenoch in First Prime Minister’s Questions
Kemi Badenoch Names Andrew Griffith Shadow Chancellor in Conservative Reshuffle
UK Treasury and Markets Focus on Fiscal Headroom Ahead of Autumn Budget
UK Government Reverses Early Release Plans for Serious Violent and Sexual Offences
UK and France Review Border Cooperation After 48,000 Small-Boat Crossings Prevented
UK Growth Outlook Weakens as Inflation and Energy Costs Rise
Breeding Tropical Mosquitoes Discovered in East London
Sadiq Khan Agrees to Search of Digital Communications in Palantir Lawsuit
Scottish Protesters Call for Moratorium on AI Data Centre Expansion
Uber Drivers Bring London Class Action Over Algorithmic Management
Reform UK Accepts £4 Million Donation From Cryptocurrency Billionaire Pardoned by Trump
Justice Secretary Tightens Early Release Scheme to Exclude Manslaughter Offenders
Kemi Badenoch Reshuffles Conservative Team as Reform UK Pressure Grows
British Mortgage Rates Rise as Global Bond Sell-Off Pushes Up Borrowing Costs
UK Records Hottest Summer on Record in 2026
UK Government Urges Households to Stock Essential Supplies Ahead of Severe El Niño Risk
UK Prepares Targeted Sanctions Over Israeli Settlements in West Bank
Reform UK Faces Electoral and Police Scrutiny Over Foreign Donation Allegations
UK and France Expand Channel Migration Cooperation as Trade Tensions Surface
UK Marks Merchant Navy Day With Tribute to Civilian Seafarers
Burnham Pays Tribute to Two Police Officers Killed on Duty in Northern England
Booking.com Left Fake Downing Street Listing Online for Two Months, Which Says
Burnham and Macron to Review UK-France Cooperation on Channel Crossings
UK Business Confidence Improves Slightly but Investment Concerns Persist
Burnham Faces Pressure Over Future North Sea Oil and Gas Licences
Burnham Pushes Wider English Devolution Through ‘Number Ten North’
British Chambers of Commerce Raises 2026 UK Growth Forecast to 1%
Keir Starmer Resigns as Holborn and St Pancras MP, Triggering By-Election
UK Chancellor Faces Tighter Budget Headroom as Long-Term Borrowing Costs Rise
UK Government Weighs Thames Water Nationalisation as Financial Crisis Deepens
Prime Minister Andy Burnham Faces First Commons Questions Over Tax and Spending Plans
Eleven British Seafarers Receive Merchant Navy Medal
Which? Creates Fake 10 Downing Street Rental Listing to Expose Booking.com Vetting Weaknesses
BP Appoints New Chairman in Effort to Stabilise Leadership
Aberdeen Sells Hydrogen Bus Fleet at Heavy Loss After Green Transport Experiment
UK Records Hottest Summer on Record as Climate Change Intensifies Extreme Heat
Scotland Pledges to End Temporary Accommodation for Children and Build 111,000 Affordable Homes
DNO Agrees $396 Million Deal to Acquire Capricorn Energy
Uber and Wayve Launch UK’s First Supervised Autonomous Ride-Hailing Service in London
Britain Expected to Avoid New US Tariffs Targeting European Union
Middle East Conflict Pushes UK Energy Costs Higher and Revives Inflation Concerns
×