Energy bill package will cost £60bn in first six months, says Chancellor Kwasi Kwarteng
Kwasi Kwarteng has unveiled the biggest round of tax cuts in half a century, said by critics to benefit the wealthy and big business, in a mini-budget touted by tax experts as unsustainable.
In a scathing assessment, the Institute of Fiscal Studies said the Chancellor was “betting the house” by putting public debt on an “unsustainable upward path”.
The pound fell to its lowest level in 37 years after Mr Kwarteng unveiled his plan, aimed at raising falling living standards by boosting growth.
Using more than £70billion in additional borrowing, it scrapped the top income tax rate for top earners.
He also slashed stamp duty for homebuyers and in April advanced a reduction in the basic income tax rate to 19 pence to the pound as part of tax cuts costing up to at £45 billion a year.
Mr Kwarteng has confirmed his intention to remove the cap on bankers’ bonuses while adding restrictions to the welfare system.
But the price of government bonds soared even higher, amid fears the package could send UK markets into meltdown.
TUC leader Frances O’Grady said: ‘This budget is a Robin Hood in reverse.
Rachel Reeves, the shadow chancellor, said it was “a plan to reward the already rich”.
Road and fossil fuel projects dominate plan, say environmentalists
Mini-budget plans for road building and fossil fuel use undermine government climate goals and destroy environmental protections, says Friends of the Earth.
Mike Childs, Head of Science, Policy and Research, said: “Almost two-thirds of the infrastructure priorities announced today under the Chancellor’s Growth Plan are road projects, as well as as five oil and gas developments in the North Sea.
“Surely the Government can no longer claim that its plans are in line with the UK’s legal obligation to reduce climate-altering carbon emissions? “It’s good that there are a few offshore wind projects in the mix – albeit a relatively small number – but alongside these there should have been a long list of onshore wind sites and solar parks because they’re quick to build and an incredibly cheap source of energy.” “What’s also missing from the growth plan is an assessment of its climate impacts.
“Instead, it functions as a template for tearing up important environmental safeguards and pursuing economic growth at all costs, which is the last thing we need in the face of a climate and ecological crisis that is already devastating the planet. “
Jane DaltonSeptember 23, 2022 5:15 p.m.
End of the ban on onshore wind farms
Environmentalists and renewables industry leaders have tentatively welcomed plans to end a de facto ban on onshore wind farms in England, which could in theory mean cheaper electricity generation. Adam Forrest reports:
Ban on onshore wind farms removed in mini-budget
Activists welcome move – but condemn fossil fuel push and plan to weaken environmental protections
Jane DaltonSeptember 23, 2022 4:50 p.m.
Dividend tax cut is good for businesses, savers and retirees, expert says
One tax expert called the mini-budget “incredible, mind-boggling and unbelievable”.
Nimesh Shah, chief executive of leading tax and advisory firm Blick Rothenberg, said it contained “tax cutting measures not seen in a generation”.
“Kwarteng was bold in his claims that he wanted a simpler, more dynamic and fairer tax system, and you could say he backed that up with his box of tax-cutting tricks,” Ms. .Shah.
Apart from the corporate tax cut, Mr Shah said the 6.85% cut in the top dividend tax rate was good news for business owners and self-employed people receiving dividends, as well as for savers and retirees with investment portfolios.
Jane DaltonSeptember 23, 2022 4:25 p.m.
National Insurance rises while corporation tax falls
National insurance has grown steadily over the past 40 years, figures show. The Chancellor canceled the last planned increase, which was to finance social assistance.
Meanwhile, corporation tax has been cut over the past 12 years since the Conservatives returned to power:
Jane DaltonSeptember 23, 2022 4:12 p.m.
Treasury minister says sterling has risen – as it hits 37-year low
A Treasury minister was left red-faced after claiming the mini tax cut had pushed the value of the pound up – moments before it plunged to its lowest level in 37 years:
Treasury minister says mini-budget has inflated the pound – as it hits 37-year low
Chris Philp red-faced after saying ‘It’s great to see the pound getting stronger thanks to the new UK growth plan’
Jane DaltonSeptember 23, 2022 4:05 p.m.
Lack of support for unpaid carers ‘will result in greater costs to society later’
A charity representing unpaid carers has condemned the lack of support in the Chancellor’s speech for carers who cannot work due to their care commitments.
Emily Holzhausen from Carers UK said: “The measures we have been calling for to support more unpaid carers with the current cost of living crisis are completely missing, leaving millions of carers facing unprecedented financial hardship this fall and this winter across the UK.
“Many caregivers tell us they are unable to pay essential bills, are cutting back on food and heating and remain desperately worried about this winter, which will undoubtedly mean higher costs for the government. and society later.
“Caregiver’s Allowance and means-tested benefits must be immediately increased in line with inflation this autumn.”
Jane DaltonSeptember 23, 2022 3:50 p.m.
Borrow to reach third highest level since war, expert says
IFS director Paul Johnson added: “Mr. Kwarteng has shown a willingness to play with fiscal sustainability in order to push through these huge tax cuts.
“He is prepared to ignore inflation risks and invite significantly higher interest rates. Injecting demand into this high inflation economy leaves the government pulling in the exact opposite direction to the Bank of England, which is likely to increase rates in response.
“Early signs are that the markets – which will have to lend the money needed to fill the gap in the government’s fiscal plans – are unimpressed. It’s worrying.
“Government borrowing is placed on an upward trajectory. It will hit its third highest level since the war and will remain well above £100billion even after the energy support package is withdrawn.
“And we haven’t heard anything about public spending. It seems almost inconceivable that the plans drawn up last year, when inflation was expected to peak around 3%, will not need to be completed at some point unless the government is willing to allow a (further) deterioration in the range and quality of public services.
“Presumably, this government would borrow for that too. Mr. Kwarteng is not just betting on a new strategy, he is betting the house.
Jane DaltonSeptember 23, 2022 3:35 p.m.
Kwarteng bets on home, says IFS, ‘with no effort to grow finances’
The Institute for Fiscal Studies has warned that Kwasi Kwarteng is “betting the house” with its sweeping tax cuts, putting public debt on an “unsustainable upward path”.
Director Paul Johnson accused him of delivering the biggest package of tax cuts in 50 years “without so much as a semblance of an effort to drive up public finance numbers”.
“Instead, the plan appears to be to borrow large sums at increasingly expensive rates, put public debt on an unsustainable upward path, and hope we get better growth.
“It marks such a radical change in the direction of economic policy-making that some of the more senior ministers might fear being hit.”
Jane DaltonSeptember 23, 2022 3:30 p.m.
Growth plan will rebuild economy, says Truss
Liz Truss said the government’s economic vision would define “how we are going to rebuild our economy and deliver for the British people”.
She tweeted: “Growth is key to creating more jobs, higher wages and more money to fund public services, like schools and the NHS.”
But one critic said the only growth would be food banks and poverty.
Jane DaltonSeptember 23, 2022 3:14 p.m.
Full story: Sturgeon’s reaction to the mini-budget
The super rich are ‘laughing at the real bank’, the Scottish First Minister has said after the Chancellor unveiled plans he said would boost economic growth.
Read more about his reaction here:
Sturgeon: Super rich ‘laughing all the way to the bank’ after mini budget
Chancellor Kwasi Kwarteng announced a so-called mini-budget on Friday.
Zoe TidmanSeptember 23, 2022 3:00 p.m.