Jeremy Hunt has been accused of "doubling down on austerity" after he warned that "eye-wateringly difficult" decisions were needed as he tore up Liz Truss's economic strategy.
The new Chancellor scaled back the energy support package and ditched "almost all" the tax cuts announced by his predecessor Kwasi Kwarteng less than a month ago as he tried to restore economic stability following weeks of turmoil on the financial markets.
Truss became Prime Minister after winning the Tory leadership contest on the back of promises to dramatically cut tax, and the wholesale abandonment of the policies has left her fighting for her job after just six weeks.
She sat next to her new Chancellor in the Commons as he ditched huge chunks of her plan.
Shadow chancellor Rachel Reeves has 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?"
SNP Treasury spokesperson Alison Thewliss said a "cliff edge" is now looming in April when the energy price guarantee ends.
She told the Commons that "economic chaos" was an "understatement" for the situation, and added: "I'm not sure words have yet been invented to describe the scale of unmitigated disaster which the Prime Minister and her chancellors have created in the past 24 days.
"We are back where we started, significantly worse off, due to Tory incompetence."
She said: "He has not been clear at all. Will he confirm the status of the bankers' bonus cap. Has it been scrapped or has it not been scrapped?"
Thewliss accused the Government of "doubling down on austerity" and said excess deaths have been linked to Tory austerity policies in Scotland, "an unacceptable human cost".
"Guarantees mean nothing under the Tories," adding "the so-called energy price guarantee turns out to be worth six months not two years. A cliff edge looming next April".
What did Jeremy Hunt announce?
- The plan to cap the cost of energy for all households for two years will now end in April, with targeted help beyond that for those most in need.
- Scrapped April's planned 1p cut to the basic rate of income tax, which will now stay at 20p indefinitely, raising an extra £6 billion a year.
- Ditched a 1.25 percentage point cut in dividend tax planned for April, worth around £1 billion a year to the Exchequer.
- Dropped plans to ease IR35 rules for the self-employed, saving around £2 billion.
- Axed a new VAT-free shopping scheme for overseas tourists, which will save around £2 billion.
- Reversed a decision to freeze alcohol duty rates from February 2023, worth around £600 million a year.
Hunt told MPs: "We are a country that funds our promises and pays our debts and when that is questioned - as it has been - this Government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances. That means decisions of eye-watering difficulty."
He said "every one of those decisions, whether reductions in spending or increases in tax" would be shaped by "compassionate Conservative values".
Financial markets, which had been spooked by the prospect of unfunded tax cuts on top of emergency interventions in the energy market and the cost of Covid-19 support, appeared reassured by Mr Hunt's announcements.
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