Liz Truss refutes claim that cutting tax 'unfairly' benefits the rich
The chancellor is set to announce tens of billions of pounds’ worth of extra spending and tax cuts today in a mini-budget, officially known as a “fiscal event”.
Kwasi Kwarteng will pledge to “turn the vicious cycle of stagnation into a virtuous cycle of growth” as he sets out the new government’s approach to the economy.
His statement is expected to set out how the government will fund the energy price cap for households and businesses as well as details of many of Liz Truss’s tax-slashing promises.
The government is dubbing it a “growth plan” as the UK faces a cost-of-living crisis, recession, soaring inflation and climbing interest rates.
Mr Kwarteng announced yesterday he was cancelling Rishi Sunak’s 1.25 percentage-point rise in National Insurance from 6 November – but Treasury figures revealed the change would benefit higher earners vastly more than the poorest.
The chancellor is also set to axe a planned increase in corporation tax and scrap the cap on bankers’ bonuses.
It has been reported that he will cut stamp duty, and proposals to fast-track a scheduled 1p cut to income tax and to slash VAT are reportedly also being considered.
Kwarteng seeks end to ‘cycle of stagnation’
Chancellor Kwasi Kwarteng will detail close to £200bn of tax cuts, energy subsidies and planning reforms, as part of prime minister Liz Truss’s bid to end “Treasure orthodoxy”.
Financial markets will also receive an initial price tag for the proposals, as the UK Debt Management Office will publish new borrowing plans after Kwarteng finishes his speech.
The market backdrop could barely be more hostile for the new finance minister. Sterling fell to its lowest against the dollar since 1985 yesterday, while British government bonds recorded their biggest one-day fall since the start of the pandemic.
Much of the decline reflects the US Federal Reserve’s rapid interest rate rises to tame inflation - which have sent markets into a tailspin - but some investors are also wary about the prime minister’s willingness to borrow big to fund growth.
A Reuters poll this week showed 55 per cent of the international banks and economic consultancies that were polled judged British assets were at a high risk of a sharp loss of confidence.
On Thursday, the Bank of England said Ms Truss’s energy price cap would limit inflation in the short term but that government stimulus was likely to boost inflation pressures further out, at a time when it is battling inflation near a 40-year high.
Namita Singh23 September 2022 04:34
Kwarteng announces tax cut worth thousands to rich and nothing to poorest
The 1.25 percentage-point rise in National Insurance introduced by Rishi Sunak will be reversed from 6 November, chancellor Kwasi Kwarteng has announced.
The health and social care levy had been intended to relieve the financial crisis crippling the care system.
Treasury figures show that the new move will benefit high earners vastly more than the poorest:
Expected reversal of Rishi Sunak’s National Insurance hike brought forward to November
Jane Dalton23 September 2022 04:30
Welcome to The Independent’s UK politics blog for Friday, 23 September 2022 where we will be providing the latest updates from Westminster on Chancellor Kwasi Kwarteng’s mini-budget.
Namita Singh23 September 2022 04:15