Quasi Quarting has unveiled the largest set of tax cuts in half a century, which critics have said benefit wealthy corporations and big business, in a mini-budget that financial experts have identified as unsustainable.
In a scathing assessment, the Institute for Fiscal Studies said the finance minister was “betting on the house” by putting government debt on an “unsustainable upward trajectory”.
The pound fell to a 37-year low after Mr Kwarteng unveiled his plan, which aims to raise sagging living standards by boosting growth.
Using more than £70bn of additional borrowing, he eliminated the highest income tax rate for high-income earners.
It also cut stamp duties for homebuyers and introduced until April a reduction in the base rate of income tax, to 19 pence per pound, as part of tax cuts that cost up to £45 billion a year.
Kwarteng confirmed plans to scrap the cap on bankers’ bonuses while adding restrictions to the welfare system.
But the government’s borrowing rate rose even higher, amid fears that the package had sent UK markets crashing.
“This budget is a reflection of Robin Hood,” said Frances O’Grady, President of TUC.
It’s a “plan to reward the really wealthy,” said Rachel Reeves, a shadow consultant.
Unban wild wind farm
Environmentalists and heads of the renewable energy industry have tentatively welcomed a plan to end a virtual ban on onshore wind farms in England, which could theoretically mean cheaper electricity generation. Adam Forrest says:
Activists welcome the move – but condemn the fossil fuel push and plan to weaken environmental protections
Jane DaltonSeptember 23, 2022 16:50
Expert says profit tax cut is good for businesses, savers and retirees
One tax expert described the mini-budget as “incredible, astounding, and unbelievable.”
It contains “tax-cutting measures we haven’t seen in a generation,” said Nimesh Shah, CEO of leading tax and advisory firm Blick Rothenberg.
“Kwarteng was bold in his assertions that he wanted a simpler, more dynamic and equitable tax system, and you could say he backed that up with a set of tax-cutting tricks,” Shah said.
In addition to the corporate tax cut, Shah said the 6.85 percent cut to the highest profit tax rate was good news for business owners and self-employed who receive dividends, along with savers and retirees with investment portfolios.
Jane DaltonSeptember 23, 2022 16:25
National Insurance rises with corporate tax cut
Figures show that National Insurance has gradually risen over the past 40 years. The chancellor canceled the latest planned hike, which was to be funded by welfare.
Meanwhile, the corporate tax has been cut over the past 12 years, since the Conservatives returned to power:
Jane DaltonSeptember 23, 2022 16:12
Treasurer claims the pound has strengthened – hitting a 37-year low
He left the Treasury Secretary in the red after claiming that the tax cut mini-budget had raised the value of the pound – moments before it plunged to a 37-year low:
The treasury secretary claims the mini-budget has boosted the pound – reaching its lowest level in 37 years
Chris Phelps’s face turned red after saying “nice to see sterling strengthening on the back of the new UK growth plan”
Jane DaltonSeptember 23, 2022 16:05
Lack of help for unpaid caregivers ‘will mean greater costs to society later’
A charity representing unpaid caregivers has condemned the lack of support in the counselor’s letter for caregivers who are unable to work due to their care obligations.
Emily Holzhausen of Carers UK said: “The actions we have been calling for to further support unpaid caregivers with the current cost-of-living crisis are missing entirely, leaving millions of caregivers facing unprecedented financial hardship this fall and during the winter across the Kingdom. United.
“Many caregivers tell us they are unable to pay basic bills, cut back on food and heating and remain very worried about this winter, which will undoubtedly mean greater costs to government and society in the future.
“Carer allowances and financially-tested carer benefits should immediately increase in line with inflation this fall.”
Jane DaltonSeptember 23, 2022 15:50
Borrowing will reach its third highest peak since the war, says expert
IFS Director Paul Johnson added: “Mr Kwarteng has shown himself willing to gamble with financial sustainability in order to move forward with these massive tax cuts.
He is willing to ignore the risks of inflation, and to call for much higher interest rates. Pumping demand into this hyperinflationary economy is leaving the government heading in the exact opposite direction of the Bank of England, which is likely to raise interest rates in response.
Early indications are that markets – which will have to lend money to plug the gap in the government’s fiscal plans – are unaffected. This is worrying.
“Government borrowing is on an upward trajectory. It will reach its third highest peak since the war, and will remain at more than £100 billion, even after the energy support package is withdrawn.
We hear nothing of public spending. It seems almost implausible that plans made last year, when inflation was expected to peak around 3%, would not need to increase at some point, unless the government is prepared to allow (further deterioration) in the scope and quality of public services .
This government is supposed to borrow for that, too. Mr. Kwarteng is not just betting on a new strategy, he is betting on the house.”
Jane DaltonSeptember 23, 2022 15:35
Kwarteng betting on the house, says IFS, ‘without any effort to raise finances’
The Institute for Fiscal Studies warned that Kwasi Quarting is “betting on the house” with its massive tax cuts, putting government debt on an “unsustainable upward trajectory.”
Director Paul Johnson accused him of setting up the largest package of tax cuts in 50 years “without the semblance of trying to raise fiscal numbers”.
Instead, the plan appears to be to borrow large sums at increasingly expensive rates, put government debt on an unsustainable upward trajectory, and hopefully get better growth.
“This represents such a dramatic change in the direction of economic policy-making that some ministers who have served longer may be concerned about being infected.”
Jane DaltonSeptember 23, 2022 15:30
The growth plan will rebuild the economy, Truss claims
Liz Truss said the government’s economic vision will define “how we will 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, such as schools and the NHS.”
But one critic said the only growth would be that of food banks and poverty.
Jane DaltonSeptember 23, 2022 15:14
Full story: Sturgeon’s reaction to the mini-budget
Scotland’s first minister said after the chancellor unveiled plans he said would drive economic growth, the super-rich are “laughing all the way to the actual bank”.
Read more about her reaction here:
Chancellor Kwasi Kwarting announced on Friday the so-called mini-budget.
Zoe TidmanSeptember 23, 2022 15:00
Settlement minister defends tax cuts
A top-level minister sought to defend the tax cuts amid heavy criticism:
Zoe TidmanSeptember 23, 2022 14:48