New Chancellor, new fiscal plan. This week began with the new Chancellor Jeremy Hunt announcing further U-turns on the government’s ‘mini-budget’, after Kwasi Kwarteng was sacked late last week. All of the tax cuts announced in the government’s Plan for Growth have been reversed, however the government still plans to abolish the Health and Social Care Levy and keep the cut to Stamp Duty. (HMT has listed the U-turns here.) 

Risk of reverting to austerity. The episode of ‘financial dominance’ over the government's fiscal policy has sparked renewed fears of spending cuts. The BBC reported that yesterday the Chancellor warned the Cabinet of “the extent of the black hole in government finances means he needs to find tens of billions to balance the books”, which may force some ministers to resign. Polling from Ipsos Mori has found ‘The level of the deficit’ is now 8th in the list of important economic indicators for the public. (A recent study published in the Journal of Epidemiology and Community Health found there were 334,327 excess deaths in England linked to austerity from 2010-2018.)

Renewed call for wealth taxes to raise revenue. The Telegraph’s Tony Diver reports that “Labour is looking seriously at reform to capital gains tax – better balancing it with income tax – but rule out more radical measures that would tax assets directly.” Church Action for Tax Justice and several prominent UK Christian leaders have written to the Chancellor urging him to “introduce wealth taxes to reduce inequality, instead of cutting public services and benefits.” Tax Justice UK’s response to his announcement argued that “to avoid further austerity we need to tax wealth more. Capital gains taxes should be aligned with income tax rates. We should end inheritance tax loopholes open to the wealthy. And we need to tax the wealth of anyone with £10 million of assets.” 

  • They can reduce inflation. The International Monetary Fund has urged the UK government to consider ‘raising windfall or wealth taxes’ to reduce inflationary pressure. This would be preferable, it argued, to the sole use of higher interest rates to tackle inflation. 
  • And don’t have to compromise economic growth. Economists Linus Mattauch, David Klenert, Joseph Stiglitz and Ottmar Edenhofer have published a paper showing how governments can tax wealth to fund public investment and reduce wealth inequality, without compromising economic growth.

Political flashpoint for energy bills in April 2023. Hunt announced the Energy Price Guarantee will now only remain in place until April, in order to avoid long-term exposure of the public finances to volatility in international gas prices. The Treasury is launching a review into how to support energy bills beyond April in ways that will lower cost to taxpayers whilst remaining supporting household needs. Sky’s Rob Powell’s analysis of leaked photos also suggest the Treasury is looking at a targeted grant scheme for vulnerable businesses, such as the hospitality and the most energy intensive sectors.

  • Macroeconomic impacts of unfreezing the Energy Price Cap. Economist Samuel Tombs calculates that “current wholesale prices point to a 73% jump in energy bills, to £4334…That's a big change in the outlook for CPI inflation (↑) and GDP (↓).” (For an explanation of how freezing (or lowering) the Energy Price Cap has deflationary effects, read our previous digest covering research from IPPR.)
  • A package to fix the UK's energy price crisis. NEF proposes to replace the Energy Price Cap with a new system for ‘free basic energy’ as part of a rising block tariff, so that all households receive the same amount of energy for free, and everyone pays the same premium price or further energy above this. They also argue that the government should create a new permanent energy element in all means-tested benefits – similar to housing or child benefit – to help the poorest families cover their remaining energy bill, paid for by increasing capital gains tax. Finally, the package includes a £750 “cost of living allowance" for all households funded through a reformed windfall tax on oil & gas.the package would  The package costs half that of freezing the price cap for 12 months, increases incentives to improve home energy efficiency and increases disposable incomes for 80% of families on average (for the poorest 50% it would be enough to fully reverse the squeeze since April 2021). Fuel Poverty Action is handing in a petition with nearly 650,000 signatures to 10 Downing St. today calling for a universal band of free energy, paid for by ending fossil fuel subsidies, windfall taxes on excess profits and higher tariffs on excessive energy use.
Weekly Updates


TUC calls for overhaul of company law. The TUC is calling for reforming “Victorian-era corporate governance structures” so that workers have a stronger voice on company boards and “responsible firms serve their workers and communities - not just their shareholders”. The report lays out the case for sharing rewards, rights and power in businesses so that the benefits of economic growth are more fairly distributed: “directors prioritise shareholder returns to the detriment of long-term company success, workforce interests and wider economic resilience.”

  • Firms have the capacity to increase wages. Their analysis found that dividends have risen three times faster than wages since 2008, with £440bn in shareholder payouts given out above the level of inflation, while wages have lost £510bn in value against inflation. (Video here.) More analysis has also found that bankers’ bonuses have doubled in size since the 2008 crash, with bonuses in finance and insurance reaching a record £20,000 a year on average.

Repoliticising the future of work. Researcher Lauren Kate Kelly has published an article which “considers how the techno-optimism that fuelled contemporary visions of workplace automation has declined in recent years [as] empirical studies of automated workplaces, in particular the warehouse, have challenged simplistic binaries of job destruction and creation.” 

Climate change

Messaging tips for the cost of living and climate crises. On Road Media, Reset Narratives & Rubber Republic have produced a guide to explore how to communicate the cost of living crisis and the climate crisis in ways that emphasise their mutually-reinforcing root causes and solutions: “These recommendations can help you communicate the crises’ connected causes and solutions to broad public audiences. The messages can be adapted to different mediums, messengers, campaigns and content.”

Countries begin to leave the Energy Charter Treaty. Spain has begun withdrawing from the Energy Charter Treaty, a highly controversial international treaty with an ‘investor state dispute settlement’ (ISDS) mechanism which in theory allows foreign investors to sue governments for changes in social or environmental laws that impact their business. The Netherlands also announced leaving last night.

Decarbonising UK transport. Common Wealth’s report written by Khem Rogaly outlines the five policies needed to secure global justice in electric vehicle supply chains while decarbonising the UK’s transport system. The report recommends taxing profits of multinational mining companies to transfer wealth to Global South countries, increase public ownership in the supply chain through progressive procurement policy, and more.

Finance and regulation

Financial systems change for people and planet. Finance Innovation Lab’s Anna Fielding has produced a guide explaining a programme which ran from 2016 to 2019, Lab Fellowship, “an incubation programme for people and ideas with the potential to transform our financial system…it is designed for people who are: Designing strategies for complex systems change; Developing and leading incubation and leadership programmes that aim to catalyse systems change; Building and activating communities of changemakers; Funding efforts to transform complex human systems.”

Investment Zones. Environmental campaigner Guy Shrubsole has been tracking which local authorities are applying for investment zones. At the time of writing, 18 have submitted expressions of interest and 2 have rejected them outright. (Work-in-progress spreadsheet here.) 

Monetary policy

What is the Bank of England playing at? Looking back at the contradicting moves from the Bank of England over the last few weeks, PEF’s James Meadway explains what’s causing the confusion: “The Bank’s aim of preserving financial stability runs directly counter, right now, to its aim of keeping inflation low. The same tools and instruments are being used to try and do two, contradictory things...there are limits to how much the Bank can do with monetary policy, and the Truss government has cack-handedly exposed those limits in the last few weeks.  “


How fair is the UK? The Fairness Foundation launches the Fairness index today, a new online tool to explain the nature, causes and consequences of key inequalities in the UK. The index uses a set of headline indicators to provide quantitative support for a series of qualitative arguments about the extent to which we live in a fair society. Watch their launch webinar at 11am today, featuring Will Hutton, Richard Wilkinson, Torsten Bell, Ann Phoenix and Will Snell.