wasi Kwarteng has unveiled a mini-budget that delivers billions of pound worth of tax cuts - including a surprise move to scrap the 45% top rate of income tax paid by the UK’s wealthiest.
The Chancellor told MPs the planned rise to corporation tax would be cancelled as he announced the cap on banker bonuses would be scrapped.
He also announced that the basic rate of income tax would be cut to 19p in the pound from April 2023. And he said the 45% higher rate of income tax will be “abolished”.
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 amounts to an “admission of 12 years of economic failure” under successive Conservative governments.
The Labour MP described the Prime Minister and Mr Kwarteng as “two desperate gamblers in a casino chasing a losing run”.
When will mini-budget be held?
The mini-budget is to be held at 9.30am with a statement from Chancellor Kwasi Kwarteng in the House of Commons.
An official Treasury briefing will then follow.
Among the key measures already confirmed in the package is the £13bn reversal of the increase in national insurance contributions, introduced in April to fund the health and social care levy.
This will come into force on November 6.
What measures could we see in mini budget?
Kwasi Kwarteng is set to unveil a package of over 30 measures as part of the Treasury’s “Growth Plan” to kickstart the UK economy, including relief for households facing high energy bills and the delivery of around 100 major infrastructure projects.
While not all measures have been confirmed, several have been heavily trailed in advance, or speculated upon.
Among the measures which could be in package: -
- Reveral of decision to raise corporation tax from 19 per cent to 25 per cent from next April
- A confirmed reversal of 1.25 percentage point rise in National Insurance from November 6
- A potential cut in stamp duty, according to reports in the Times
- Slashing business levies in new “investment zones”, which have been dubbed “full fat freeports”.
- Scrapping the cap on bankers’ bonuses
Minister rejects suggestion budget measures are ‘gamble'
Simon Clarke, the Levelling Up Secretary, has rejected the suggestion that the economic plan due to be set out by the Chancellor later was a “gamble".
Some economic analysts have been sceptical about the sustainability of some of the tax-cutting measures that Kwasi Kwarteng will announce in the Commons on Friday, the biggest since the 1980s.
Calling it a “game-changing financial statement", he said the measures were designed to return the UK to the level of growth seen before the financial crash in 2008.
He told Sky News that Mr Kwarteng would “tackle what is a record high tax burden on families and businesses, reflecting clearly the fact we've gone through some extraordinarily difficult years but setting out a fundamentally new approach to go for growth to make sure that we we win the argument that a more successful enterprise economy is good for the whole of this country”.
Mini budget is not ‘trickle down economics’, insists minister
Simon Clarke, the Levelling Up Secretary, has also rejected as “nonsense" the suggestion that Liz Truss and Kwasi Kwarteng are engaging in "trickle-down economics".
"This whole term trickle-down is such a nonsense and is itself a centre-left mischaracterisation of what this Government is all about. We need to grow the economy because a more successful economy is good for everybody," he told Sky News.
He instead called it a "virtuous circle".
A former chief secretary to the Treasury, he also defended his decision to now support a reversal of the rise in national insurance, saying the NHS would get investment through general taxation rather than a specific levy.
No ‘top down’ imposition of ‘investment zones’ with relaxed planning rules, says minister
In further comments on his broadcast round, Levelling Up Secretary Simon Clarke promised there would be no “top-down" approach to new local investment zones.
The Chancellor will announce that it is in talks with local authorities in the West Midlands, Tees Valley, Somerset and other regions to establish new investment zones - areas with lower taxation and planning rules.
He told Sky News: “These zones will only happen where there is local consent and we've been very clear about that in the discussions we've been having with local authorities and mayors over recent days."
He said he hoped to see progress in the coming weeks about where the zones will be created.
“They will only happen where there is a local appetite for them to occur. There will be no top-down imposition of these zones."
‘We face really tough times’, warns Truss ahead of mini budget
In a joint video with Chancellor Kwasi Kwarteng, Prime Minister Liz Truss has vowed the measures will help grow the economy and tackle the “really tough times” Britain faces.
She said: “We do face really tough times. We’ve got the appalling war in Ukraine perpatrated by Putin which has raised energy prices.
“We have the aftermath of Covid which caused a huge economic shock to the global economy. And that’s why it’s so important that we act with urgency to get things moving in Britain, to get those jobs and growth into communities up and down the country”.
Budget will lead to growth, vows Truss
Liz Truss has vowed that her and her Chancellor’s plans would boost growth and ultimately lead to higher wages and better public services.
“What this is about is making sure the United Kingdom is a successful economy where we’re getting more jobs, more investment and more opportunities for people across the country,” Ms Truss said.
“And what that ultimately means is that people will be earning higher wages, that we’ll see more successful businesses and we’ll see more money going into our public services.
“This is a fantastic country with huge reserves of talent, energy and enterprise. And what this is all about is unleashing those talents, that energy, for the betterment of our country.”
Kwarteng: We cannot tax ourselves to growth
Chancellor Kwasi Kwarteng has said the country cannot tax itself to prosperity ahead of his mini budget later today.
“We want to grow the British economy, and that’s not just growth for the sake of growth, as the prime minister said, growth means better jobs, higher wages, and also more tax revenue for our public services so that we can protect the most vulnerable in our society,” said Mr Kwarteng in a video released by No 10.
“What we can’t do is simply tax ourselves to prosperity and keep raising taxes indefinitely.
“I’m really excited, I’m really, really excited. I think it’s an ambitious programme, I think it’s a dynamic programme, I think it’ll deliver, it is delivering, and I’m really looking forward to the statement.”
Labour: Tory plan is not plan for growth and is enormous gamble
Labour’s Pat McFadden, the shadow chief secretary to the Treasury, said that what the Government is due to announce on Friday is not in reality a plan for growth.
“What today looks like is the Government taking an enormous gamble with the public finances by taking a series of measures and putting it all on borrowing, and calling it a plan for growth,” he said.
He said it does not appear as if the Government is going to try to raise any revenue, as he repeated Labour's call for a further windfall tax on oil and gas companies.
“This isn't really a plan for growth, it is a return to some very old-style Tory polices based on the belief that if you make those who are already wealthy even wealthier it will trickle down to the rest of us,” he told BBC Breakfast.
He added that what he called “flip-flopping and chaos" was a threat to stability, saying: “It will be the third change in national insurance in six months. It is the legislative equivalent of digging a hole and filling it back in again."
‘Budget for growth’ will help pay down debt from borrowing, insists minister
Pressed about who will pay for UK debt, ahead of the Chancellor's fiscal event, Levelling Up Secretary Simon Clarke said: “The prescription here is that we get a better underlying growth that unleashes the tax receipts that will allow us to both grow the economy and also to get on top of that debt."
Mr Clarke said that stagnating growth makes it “very hard to manage the burden of our debt and the challenge of funding our public service".
He told BBC Breakfast that the UK was facing “major inflationary pressures", making it more even important to deliver growth.
It comes after the Bank of England warned that the UK may already be in a recession.