Mini Budget 2022: Chancellor Kwasi Kwarteng unveils tax cuts as Labor calls it ‘another zigzag towards political failure’ – live | Politics

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Labor says mini budget will be ‘another zigzag towards political failure’

Rachel Reevesthe shadow chancellor, will answer to Kwasi Kwarteng in the Commons today and in an article in the Financial Times, she gives a taste of what she’s likely to say. Reeves says Liz Truss represents “another zigzag on a road to political failure” rather than proper change. She says:

Liz Truss wants the British public to believe she represents change. She and Kwasi Kwarteng would even have you believe they have a new plan. But what they suggest is just another zigzag on a path of tracking policy failures over the last 12 years of the economy.

Like Boris Johnson before her, the new prime minister and chancellor are long-serving prime ministers. Desperate to present themselves as agents of change, they must scrap the growth plans they once supported – there have been six since the Conservatives took power in 2010, each announced with great fanfare but with little effect. Instead, one constant over a decade of Tory government is low growth.

Reeves is particularly critical of the plan to abandon the planned increase in corporate tax. She says:

Of course we need a competition regime, but the level in the UK is already below France and Germany and would remain so at the planned 25 per cent – yet UK business investment is still the lowest in the G7. Businesses have other priorities: in the latest ONS survey, only 2 per cent listed tax as their biggest concern.

And she also says Truss is wrong to say that growing the economy matters more than worrying about how its benefits are shared. Reeves says:

Truss says she will deprioritize redistricting. But research from the IMF has shown that higher income inequality is associated with lower and more fragile growth. It is obvious why. Concentrating income among fewer people—those least likely to use it and drive the economy forward—undermines workers’ health and education, the critical components of a productive workforce.

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From Sky’s Ed Conway

The pound is falling again against the dollar this morning. Now under $1.12.
Bloomberg’s trade and currency-weighted index of sterling’s strength is down to its lowest level EVER👇
The very background for today’s financial statement… pic.twitter.com/pxArwNgjjd

— Ed Conway (@EdConwaySky) 23 September 2022

Pat McFadden, the shadow chief secretary to the Treasury, also gave interviews this morning. He told BBC Breakfast that the government was engaged in trickle-down economics. He explained:

What it looks like today is that the government is taking a huge gamble with the public finances by taking a series of measures and putting it all on loans and calling it a plan for growth…

This isn’t really a plan for growth, it’s a return to some very old fashioned Tory policies based on the belief that if you make those who are already wealthy even more wealthy, it will trickle down to the rest of us …

It will be the third change to national insurance in six months. In legislation, this is the equivalent of digging a hole and filling it in again.

Simon Clarke, the level-up secretary, had a particularly difficult interview on the Today program with Mishal Husain. That got these tweets from Jonathan Portesformer government economist and now professor of economics at King’s College London.

Today, @SimonClarkeMP literally just said the point of raising NI was to raise money for public services and the point of cutting it is to raise money for public services. Whatever you think of the policy, they have completely abandoned any pretense of credibility.

— Jonathan Portes (@jdportes) 23 September 2022

Ian Mulhernhead of policy at the Tony Blair Institute think tank, was equally unimpressed.

A lot of double thinking around today. Masterclass from @SimonClarkeMP. 🏥Tax relief helps finance public services! 💰Giveaways for the rich help level up!
🏦Financial policy will boost growth, while the bank controls inflation!

War is peace, freedom is slavery, ignorance is strength!

— Ian Mulheirn (@ianmulheirn) 23 September 2022

And the FTs Peter Foster was also not convinced by Clarke’s economic analysis.

To listen to incomparable @MishalHusain @BBCr4today tries (and fails) to contain his frustration over @SimonClarkeMP compare the current “plug for growth” to what worked in the 80s/90s while ignoring the inflationary elephant in the room. Thought she might actually say “duuuuuuuuh”.

— Peter Foster (@pmdfoster) 23 September 2022

Development Secretary Simon Clarke says it is ‘nonsense’ to call Truss’ approach trickle-down economics

Simon Clarke, the new level-up secretary, has been doing interviews this morning ahead of the mini-budget. Here are some of the points he made.

This whole concept of “trickle-down” is such nonsense and is itself a centre-left mischaracterization of what this government is all about. We need to grow the economy because a more successful economy is good for everyone.

Like my colleague Larry Elliott explains herewhat Truss says and does fits exactly the usual definition of trickle-down economics.

These zones will only happen where there is local consent and we have been very clear about that in the discussions we have had with local authorities and mayors in recent days…

They will only happen where there is a local appetite for them to occur. There will be no top-down imposition of these zones.

The prescription here is that we get a better underlying growth that releases the tax revenues that enable us to both grow the economy and also get on top of that debt.

Labor says mini budget will be ‘another zigzag towards political failure’

Rachel Reevesthe shadow chancellor, will answer to Kwasi Kwarteng in the Commons today and in an article in the Financial Times, she gives a taste of what she’s likely to say. Reeves says Liz Truss represents “another zigzag on a road to political failure” rather than proper change. She says:

Liz Truss wants the British public to believe she represents change. She and Kwasi Kwarteng would even have you believe they have a new plan. But what they suggest is just another zigzag on a path of tracking policy failures over the last 12 years of the economy.

Like Boris Johnson before her, the new prime minister and chancellor are long-serving prime ministers. Desperate to present themselves as agents of change, they must scrap the growth plans they once supported – there have been six since the Conservatives took power in 2010, each announced with great fanfare but with little effect. Instead, one constant over a decade of Tory government is low growth.

Reeves is particularly critical of the plan to abandon the planned increase in corporate tax. She says:

Of course we need a competition regime, but the level in the UK is already below France and Germany and would remain so at the planned 25 per cent – yet UK business investment is still the lowest in the G7. Businesses have other priorities: in the latest ONS survey, only 2 per cent listed tax as their biggest concern.

And she also says Truss is wrong to say that growing the economy matters more than worrying about how its benefits are shared. Reeves says:

Truss says she will deprioritize redistricting. But research from the IMF has shown that higher income inequality is associated with lower and more fragile growth. It is obvious why. Concentrating income among fewer people—those least likely to use it and drive the economy forward—undermines workers’ health and education, the critical components of a productive workforce.

Good morning. At the Guardian, like the BBC, for the sake of simplicity we have decided to call today’s event the mini budget for 2022. It’s clearer than calling it a “fiscal event” as they do at the Treasury, but it’s not ideal because what we get isn’t a budget (if it was, it would be accompanied by an economic forecast from the Office of Budget responsibility, probably say it would have dangerous consequences for inflation and borrowing), and it will not be mini at all. In fiscal terms, it will be huge – the biggest package of tax cuts since Nigel Lawson’s 1988 Budget, according to economists.

And just as the Lawson Budget changed the political consensus around taxation for a decade, Liz Truss and her chancellor, Kwasi Kwarteng, want to shatter orthodox thinking about borrowing and growth. When David Cameron became prime minister in 2010, the Conservatives slammed Labor, arguing that Gordon Brown had spent too much and lost control of the public finances. To Jeremy Corbyn, the Tories claimed that Corbynomics depended on the discovery of a non-existent “magic money tree”. Now Truss and Kwarteng argue that unfunded tax breaks are wise because they will spur economic growth and ultimately lead to higher tax revenues, even though Rishi SunakKwarteng’s predecessor, has explicitly smashed this approach his But reading in February this year. Sunak said:

I get discouraged when I hear the flippant claim that ‘tax cuts always pay for themselves’. They don’t. A sustainable tax cut requires hard work, prioritization and a willingness to make difficult and often unpopular arguments elsewhere. And it is difficult to lower taxes at a time when demands on the state are growing.

Sunak will be completely discouraged today.

This could prove to be the defining announcement of the Truss premiership, and it is extraordinarily risky. The political danger is that even if Truss and Kwarteng can turbo-change the economy, voters won’t start to feel it until the next election. The economic concern is that the strategy will fail and that they will crash the public finances.

Here’s our news story on what to expect Larry Elliott, Jessica Elgot and Richard Partington. Chancellors always like a surprise announcement on Budget Day and it has been reported that Kwarten has left two rabbits in the hat ready to present to MPs.

In its first edition briefing, Archie Bland has a good analysis of what’s to come—and, more importantly, a guide to what we don’t know about what will happen today.

And Richard Partingon has five charts that explain the background to the mini budget.

Kwarteng is due to make his statement to MPs at 9.30, but if the Chair gives an urgent question (which is unlikely) it may come later. We’ll cover it live, then bring you all the best reactions and analysis.

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