New PM to decide on Hunt’s Halloween budget plan

The new prime minister will have to decide whether to go ahead with the planned Halloween statement setting out how the Government intends to get the public finances back on track, Downing Street has said.

Work is continuing in Whitehall, led by Chancellor Jeremy Hunt, in preparation for the medium-term fiscal plan to be announced on October 31 along with an updated set of economic forecasts from the Office for Budget Responsibility (OBR).

However, a No 10 spokeswoman said it would be up to Liz Truss’s successor to decide whether to proceed with that approach and with the same timetable.

“Major fiscal decisions will be for the next prime minister,” the spokeswoman said.

“Work is ongoing in preparation for the medium-term fiscal plan. That is obviously led by the Chancellor working with the PM in the usual way.

“We are working in preparation for the 31st but obviously the decision on proceeding with that and with that timetable would be for the new prime minister.”

On Monday, Mr Hunt warned of “eye-wateringly difficult” decisions ahead on tax and spending as he junked his predecessor Kwasi Kwarteng’s controversial £45 billion mini-budget tax giveaway.

While his announcement calmed the financial markets, which had been in turmoil since Mr Kwarteng’s statement last month, he made clear taxes would have to go up and spending reined in to address an estimated £40 billion black hole in the public finances.

However it is not clear whether the next prime minister – who may have only just entered office – will want to continue with his strategy.

While Rishi Sunak, who has emphasised the need for financial stability, may take a broadly similar approach if he becomes prime minister, Boris Johnson has in the past taken a more expansionary approach.

However, a former deputy governor of the Bank of England warned that whoever comes in will have to stick with Mr Hunt and his plan if they want to avoid more chaos in the markets.

Professor Sir Charlie Bean told BBC Radio 4’s The World at One: “Whoever comes in pretty much has to accept whatever Jeremy Hunt has planned for the fiscal statement. What you couldn’t really have is a comprehensive re-opening of the issues.

“It would be even worse if the new prime minister decided they wanted to replace Jeremy Hunt with another chancellor. That really would create a lot of volatility in the financial markets.

“There has really to be an acceptance on the part of whoever takes over as prime minister that they will defer to Jeremy Hunt.”