Jeremy Hunt said ‘taxes are not going to go down as quickly as people thought, and some taxes are going to go up’ (Picture: Reuters)

The coming years are going to be ‘very difficult’ with every government department told to find spending cuts and some taxes going up, the new Chancellor admitted.

Jeremy Hunt took over from sacked Kwasi Kwarteng just two days ago, and has already set forward a very different approach to finances.

He admitted that things are going to be ‘very difficult’ – but insisted it wouldn’t be a return to 2010-style austerity.

Mr Hunt, who was also in government during the cost cutting era of David Cameron and George Osborne, said the current administration was one of ‘compassionate Conservatism’.

‘Top of our mind will be struggling families, struggling businesses, the most vulnerable people, and we’ll be doing everything we can to protect them,’ he said.

But pressed on whether there would be cuts coming, he said: ‘Spending is not going to increase by as much as people hoped, and indeed we’re going to have to ask all government departments to find more efficiencies than they had planned’.

Doing the Sunday morning media rounds today, he said he was ‘surprised’ to be asked to become chancellor as he had ‘been pretty happy on the back benches for the last few years’.

He told the BBC’s Laura Kuenssberg: ‘It’s going to be very difficult and we have to be honest with people about that.

‘We are going to have to take some very difficult decisions both on spending and on tax.

‘And taxes are not going to go down as quickly as people thought, and some taxes are going to go up.

But our priority, the lens through which we’re going to do this is a compassionate Conservative government.’

He didn’t set out the exact nature of spending cuts, but said ‘actions speak louder than words’ as he promised to reassure the markets with effectively a new budget in two weeks’ time on Halloween, which unlikely Kwarteng’s will be ‘independently verified by the Office for Budget Responsibility’.

Asked why people should trust what the Prime Minister or Government says, he said: ‘Because she’s listened. She’s changed. She’s been willing to do that most difficult thing in politics, which is to change tack.’

He said he wants to keep as many of Liz Truss’s tax cuts as he can but all options remain open.

He said: ‘I’m not taking anything off the table. I want to keep as many of those tax cuts as I possibly can because our long-term health depends on being a low-tax economy. And I very strongly believe that.’

Liz Truss’s first month as prime minister has been chaotic, with financial markets sent into a panic by Kwarteng’s budget which initially included a tax cut for the richest funded by borrowing.

In an unusual intervention, even US President Joe Biden joined in the criticism telling reporters: ‘I wasn’t the only one that thought it was a mistake,’ and calling the outcome ‘predictable’.

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He took over from sacked Kwasi Kwarteng just two days ago, and has already set forward a very different approach to finances.