your Kwarteng has unveiled a mini-budget that delivers billions of pounds worth of tax cuts – including a surprise move to scrap the 45% top income tax paid by Britain’s richest.
The chancellor told MPs the planned rise in corporation tax would be scrapped as he announced the cap on bank bonuses would be scrapped.
He also announced that basic income tax would be cut to 19p in the pound from April 2023. And he said the 45% higher rate of income tax would be “abolished”.
Sir. Kwarteng said his economic vision would “turn the vicious circle of stagnation into a virtuous circle 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 Labor MP described the Prime Minister and Mr Kwarteng as “two desperate gamblers in a casino chasing a losing run”.
Almost two-thirds believe that Kwarteng’s tax cuts will benefit the rich more
Almost two-thirds of people think Kwasi Kwarteng’s tax cuts will benefit the rich more, according to a YouGov poll.
Of about 9,400 adults surveyed, 63% said the changes will help richer people more, 3% said poorer people and 9% think both groups will benefit equally.
More than half of respondents (52%) said the Chancellor’s measures will not be very or not at all effective in boosting the UK economy, while only 19% said very or fairly effective.
Asked about the impact on people’s lives, 28% said they will end up worse off, 34% said the changes will make no difference and 19% said they will end up better off.
Kwarteng rejects suggestion his financial plan is ‘gambling’
Kwasi Kwarteng rejected the suggestion that his economic announcement in Parliament on Friday was “a gamble”.
During a visit to the Berkeley Modular Housing Factory in Ebbsfleet, Kent, on Friday, he told reporters: “It is not a gamble.
“What is a gamble is thinking that you can keep raising taxes and get prosperity, which clearly didn’t work.
“We cannot have a tax system where you get a 70-year peak, so the last time we had tax rates at this level before my tax cuts was actually before her late majesty came to the throne.
“It was completely unsustainable and that’s why I’m pleased to have been able to lower the taxes across the piste this morning.”
See: The chancellor’s mini-budget at a glance
Former Tory minister calls tax cuts ‘wrong’
Conservative former minister Julian Smith has said the chancellor’s decision to give a “huge” tax cut to the wealthy was “wrong”.
“In a statement with many positive businesses, this huge tax cut for the very rich miscalculates at a time of national crisis and real fear and anxiety among low-income workers and citizens,” he tweeted.
Government ‘completely out of touch with the public’, says Davey
Liberal Democrat leader Sir Ed Davey said the chancellor’s mini budget speech showed the government was “completely out of touch” with the public.
Speaking on College Green on Friday, Sir Ed said the fact that the pound had fallen to a 37-year low against the dollar during Kwasi Kwarteng’s speech to the House of Commons also indicated that global investors were “very concerned” about the government’s new economic strategy. .
He said: “This budget shows how the Conservatives are totally out of touch with people. Millions of families and pensioners are struggling with skyrocketing energy bills, food bills, mortgages and it seems the Conservatives either don’t get it or indifferent.
“We needed a plan to help people, and this is not a plan for our economy.”
He added: “It seems that investors around the world are very concerned about this economic package, whether it’s the currency markets with a falling pound, whether it’s the cost of sovereign debt, which has risen on the back of this, I think people signals distrust of the conservatives.
“So it’s not just members of the public who are struggling who feel the government is out of touch, it’s also international investors.”
The beverage industry welcomes the tariff freeze
A planned increase in the alcohol tax was among the measures that the Chancellor put on hold on Friday.
In a mini-budget that put tax cuts at the centre, Kwasi Kwarteng announced that an increase in customs duties on beer, cider, wine and spirits would be cancelled.
Alongside an 18-month transition measure for wine duties, he also said he would extend draft relief to smaller casks to help support smaller breweries.
The Scotch Whiskey Association praised the chancellor’s move and said the government had “delivered”.
“The tariff freeze will not only support our sector, but the hospitality industry and the wider economy,” it said.
IFS: Chancellor ‘bets the house’ on a risky high loan strategy
The Institute for Fiscal Studies (IFS) think tank has analyzed the chancellor’s statement and said he is “betting the house” on a risky strategy.
Director Paul Johnson said: “Injecting demand into this hyperinflationary economy leaves the government in the exact opposite direction to the Bank of England, which is likely to raise interest rates in response.
“Early signs are that the markets – which will have to borrow the money required to close the gap in the government’s fiscal plans – are not impressed. That is worrying”.
He said cabinet members could be forgiven for having whiplash, such is the suddenness of the government’s change in economic policy.
“Mr Kwarteng is not just betting on a new strategy, he is betting the house,” he said.
West End welcomes return of VAT-free shopping for tourists
West End business leaders have hailed the return of duty-free shopping for foreign visitors as “a big win” for London.
Chancellor Kwasi Kwarteng said he would reverse the repeal of the benefit, which had made shopping in the capital 20 percent cheaper for overseas tourists.
Dee Corsi, interim chief executive of business group New West End Company, said: “Today’s decision to reintroduce duty-free shopping for overseas visitors is a major win for London’s international centres.
“Now the West End can compete on equal terms with Paris, Milan and Madrid as one of the world’s top shopping and leisure destinations.”
Linda Ellett, head of consumer markets, retail and leisure at consultants KPMG in the UK, added: “The returns from VAT-free shopping for tourists increase London’s competitiveness in attracting the spending power of international visitors.”
Truss: Our vision sets out how we will rebuild our economy
Liz Truss said the government’s economic vision would set out “how we will rebuild our economy and deliver for the British people”.
She tweeted: “Growth is key to delivering more jobs, higher wages 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.”
The renewable energy industry cautiously welcomes plans to make it easier to build wind turbines
The renewable energy industry has so far 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 the rules for onshore wind farms in line with other developments.
Rules introduced in 2015 have effectively stopped the construction of onshore wind farms in the UK since then.
Jess Ralston, senior analyst at the Energy and Climate Intelligence Unit, said: “About eight in 10 people support onshore wind, so the ban has been a major anomaly in UK energy policy as it is both cheap and popular with the public.
“So a decision to lift the ban shows that the new government has listened to the experts and understands that building more UK renewables reduces our dependence on expensive gas and thus cuts bills.”
But energy insiders also warned that more details will be needed and that rules will need to be changed before they know how significant the move will be.