Sadiq Khan has claimed the Government has “run out of ideas” after Jeremy Hunt ditched most of the remaining policies from Kwasi Kwarteng’s mini-budget.
“The Government’s in shambles – it’s clearly chaos,” the Mayor of London said.
“Families, businesses, investors don’t know from one minute to the next what the Government’s policy is. It’s no way to run an economy, it’s no way to run the country.
“What’s clear now is this Government’s run out of road, it’s run out of ideas. And that’s why it’s so important for them to actually give the British public the chance for voting for a fresh start and call a general election.”
On Monday morning, Mr Hunt dramatically scaled back support for household energy bills and ditched tax cuts promised by his predecessor, Mr Kwarteng, as he seeked to restore stability following weeks of turmoil on the financial markets.
In an emergency statement, Mr Hunt said the energy price guarantee – which had been due to cap prices for two years – will end in April after which time the Government will look to target help for those most in need.
He said he is abandoning plans to cut the basic rate of tax by 1p – which had been due to be brought forward to April – and that it would remain at 20p in the pound until the country can afford to reduce it.
The cut in dividend tax promised by his predecessor will also go, along with VAT-free shopping for overseas tourists, the freeze on alcohol duty, and the easing of the IR35 rules for the self-employed.
Mr Hunt said the tax measures alone will bring in £32 billion after economists estimated the Government is facing a £60 billion black hole in the public finances.
Shadow chancellor Rachel Reeves, reacting to Mr Hunt's statement, said the Conservatives “have lost all credibility”.
She said in a statement: “The Chancellor said that growth requires ‘confidence and stability’ yet it’s clear that the Tories can’t provide this.
“There will continue to be a huge cost to families because of the actions of this Tory Government.
“We are still flying blind with no OBR forecasts and no clarity of the impact of their mistakes.
“The humiliating climb-down on their energy plan begs the question yet again – why won’t they bring in a windfall tax on energy producers to help foot the bill?"