wasi Kwarteng has unveiled a mini budget offering billions of pounds worth of tax cuts – including a surprise move to scrap the top 45% income tax rate paid by the UK’s wealthiest. The chancellor announced sweeping moves to revive the economy at the much-anticipated “fiscal event” on Friday morning. The government calls it a “growth plan” at a time when the UK is facing a cost of living crisis, recession, soaring inflation and rising interest rates. The chancellor told MPs the planned corporation tax rise would be scrapped as he announced the cap on bankers’ bonuses would be scrapped. He also announced that the basic rate of income tax would drop to 19p in the pound from April 2023. And he said the 45% top rate of income tax would be “abolished”.
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Mr Kwarteng said his economic vision would “turn the vicious cycle of stagnation into a virtuous cycle of growth”. But shadow chancellor Rachel Reeves said the strategy amounted to an “admission of 12 years of economic failure” under successive Conservative governments. The Labor MP described the Prime Minister and Mr Kwarteng as “two desperate gamblers in a casino chasing a losing streak”.
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The West End welcomes the return of VAT-free shopping for tourists
West End business leaders have hailed the return of VAT-free shopping for overseas visitors as “a big win” for London. Chancellor Kwasi Kwarteng said he would reverse the scrapping of benefits that made shopping in the capital 20% cheaper for foreign tourists. Dee Corsi, interim chief executive at business group New West End Company, said: “Today’s decision to bring back duty free shopping for overseas visitors is a big win for London International Centres. “Now the West End can compete on a level playing field with Paris, Milan and Madrid as one of the world’s leading shopping and leisure destinations.” Linda Ellett, head of UK consumer markets, retail and leisure at KPMG, added: “The return of VAT-free shopping for tourists increases London’s competitiveness in attracting the spending power of international visitors.” Read our full story here. 1663940253
Truss: Our vision defines how we will rebuild our economy
Liz Truss said the government’s economic vision would set out “how we rebuild our economy and deliver for the British people”. She tweeted: “Growth is key to delivering more jobs, higher pay and more money to fund public services such as schools and the NHS. “Our Growth Plan sets out how we will rebuild our economy and deliver for the British people.” 1663938590
Renewable energy industry cautiously welcomes plans to make it easier to build wind turbines
The renewable energy industry has provisionally welcomed the government’s plan to make it easier for developers to build wind turbines in England for the first time in seven years. The government said it would bring in rules for onshore wind farms in line with other developments. Rules that came into force in 2015 have effectively stopped the construction of any onshore wind farms in the UK since then. Jess Ralston, senior analyst at the Energy and Climate Information Unit, said: “Nearly eight in 10 people support onshore wind, so the ban was a major anomaly in British energy policy given that it is both cheap and popular with the public. “So a decision to lift the ban suggests the new government has listened to the experts and understands that building more British renewables reduces our reliance on expensive natural gas and so lowers bills.” But energy insiders also cautioned that more details will be needed and the rules will have to change before they know how significant the move will be. 1663937369
The conservative donor and businessman welcomes the tax cuts
Sir Rocco Forte, a Conservative donor and chairman of Rocco Forte Hotels, welcomed Chancellor Kwasi Kwarteng’s series of tax cuts. He told BBC Radio 4’s World At One programme: “I think it’s great. I have never seen a government hit the ground running as quickly as this one when it comes to power. “This is going to be a massive boost to the economy and it’s just the beginning I think of what the government plans to do. “I’m very, very encouraged by that. It’s a budget that will help businesses, allow individuals to reap the rewards of their efforts and hard work.” 1663936977
Tax increases or spending cuts will be needed in the future, the think tank warns
The Institute for Fiscal Studies has warned that future tax increases or spending cuts will be needed to pay down the mounting debt. Deputy director Carl Emmerson estimated that even when the energy support package expires in two years’ time, the government will still be borrowing £110bn a year, meaning debt will continue to rise. He told BBC Radio 4’s The World at One: “Maybe the government will get lucky and growth will come… but as we stand it looks like these tax cuts will not be sustainable and that other tax increases or spending cuts will be needed for their payment. “These tax cuts alone will not produce sufficient increases in growth to make them self-financing.” The government argues that the growth the tax cuts will promote will lead to higher tax revenue in the long run. 1663934570
The mini-budget will “embed justice across the UK”, says Wales’ finance minister
Wales’ finance minister says she believes the Chancellor’s mini-budget will “embed the injustice” across the country. Rebecca Evans MS said: “Today’s announcements show that the UK Government is heading in a deeply worrying direction, with misplaced priorities leading to a retrograde statement that will embed injustice across the UK. “Instead of providing meaningful, targeted support to those who need help most, the chancellor is prioritizing funding for tax cuts for the wealthy, unlimited bonuses for bankers and protecting the profits of big energy companies.” 1663934098
The changes will benefit those on the highest incomes, London’s mayor says
London Mayor Sadiq Khan criticized the government’s mini-budget, suggesting the new economic plan benefits the wrong sectors. 1663932841
Nurses union says government has ‘wrong priorities’, urges strike
The Royal College of Nursing described the mini-budget as “billions to the bankers and nothing to the nurses”. Chief secretary and chief executive Pat Cullen said it was a clear sign the government had its “wrong priorities”. “Nursing will be disappointed by the decision to prioritize wealthy bankers over NHS and social care staff, some of whom use food banks and live in a financial crisis,” he said. “Ministers have taken advantage of the goodwill of nursing staff for far too long and we urge our members to vote for strike action when our polls open on October 6.” 1663932579
Government borrowing will increase by £72 billion
Government borrowing will rise by £72 billion as a result of Chancellor Kwasi Kwarteng’s mini-budget, according to Treasury documents. The Debt Management Office’s net funding requirement has been revised upwards from £161.7bn in April to £234.1bn. It will be financed through additional gold sales of £62.4 billion and net sales of Treasury bills of £10 billion. 1663931749
Kwarteng: I am happy to join the calls for cuts in fuel consumption charges
Kwasi Kwarteng said he was pleased to be “involved” in a call for fuel duty cuts as MPs asked the Chancellor to help with a wide range of tax and spending issues. After his first major set of budget announcements in the Commons as Chancellor, Conservative backbenchers sought to test Mr Kwarteng’s instincts and draw his attention to a number of policy issues, including aid spending, business rates and Sunday opening hours . Conservative MP Robert Halfon, a long-time fuel duty cut campaigner, said petrol and diesel prices were at “all-time highs”. He asked the chancellor if in the next budget he could “please do what he can to reduce fuel tax”. Mr Kwarteng replied: “I would be very happy to deal with my right honorable friend on that.”
