LONDON—Britain’s new finance minister Jeremy Hunt scrapped Prime Minister Liz Truss’s economic plan and scaled back her vast energy support scheme on Monday, making a historic policy U-turn to try to stem a dramatic loss of investor confidence.
Truss’s spokesman denied that Hunt was running the country after his new strategy sent the pound soaring and helped government bond prices start to recover from the rout that followed her government’s Sept. 23 plan for unfunded tax cuts.
Truss later sat in parliament as Hunt detailed why he needed to reverse nearly all the policies that had helped her become Conservative Party leader and premier less than six weeks ago.
“We are a country that funds our promises and pays our debts,” Hunt told parliament, adding that what would follow was decisions of “eye-watering difficulty” to cut public spending.
The former foreign and health minister was appointed on Friday after Truss sacked her close ally Kwasi Kwarteng.
Under the new policy, most of Truss’s 45 billion pounds of unfunded tax cuts will go and the two-year energy subsidy scheme for households and businesses—expected to cost well over 100 billion pounds—will now be curtailed in April.
A review after that will target the scheme to “cost the taxpayer significantly less than planned.”
Last week, Truss had said her government had produced a support package that would protect families for this winter and next.
She will be expected to defend the new policy when she faces her weekly parliamentary questions on Wednesday.
Hunt said halting the planned tax cuts would raise 32 billion pounds ($36 billion) every year. The pound soared by as much as 2.3 percent to $1.1420 at 5.11 p.m. (1611 GMT).
Truss said on Twitter: “We have taken action to chart a new course for growth that supports and delivers for people across the United Kingdom.”
($1 = 0.8887 pounds)
