Kwasi Kwarteng has unveiled a list of tax cuts in a mini-Budget that unions have called “Robin Hood in reverse”.
The chancellor is facing criticism that his plans – which includes scrapping the highest rate of income tax and the bonus cap for bankers – largely benefit the richest in society.
A planned increase in corporation tax on big business profit has also been axed.
Frances O’Grady from the TUC, which represents trade unions across the country, said Liz Truss and her chancellor were “holding down wages and lining the pockets of big corporations and City bankers.
She added: “This budget is Robin Hood in reverse.”
The mini-Budget – which has been sold as a “growth plan” for the UK economy – comes amid a cost of living crisis driven by soaring inflation, rocketing energy bills and wages failing to keep up with these increases.
Rachel Reeves, the shadow chancellor, said it was “a plan to reward the already wealthy” rather than to grow the economy.
Lack of help for unpaid carers ‘will mean bigger costs for society later’
A charity representing unpaid carers condemned the lack of support in the chancellor’s speech for carers who are unable to work because of their caring commitments.
Emily Holzhausen of Carers UK said: “The measures that we have been calling for to support unpaid carers more with the current cost of living crisis are completely missing, leaving millions of carers facing unprecedented financial hardship this autumn and over winter across the UK.
“Many carers are telling us they are unable to pay essential bills, they are cutting back on food and heating and remain desperately worried about this winter, which will undoubtedly mean bigger costs for government and society further down the line.
“Carer’s Allowance and carers’ means-tested benefits need to be immediately raised in line with inflation this autumn.”
Borrowing to reach its third-highest peak since war, says expert
IFS director Paul Johnson added: “Mr Kwarteng has shown himself willing to gamble with fiscal sustainability in order to push through these huge tax cuts.
“He is willing to shrug off the risks of inflation, and to 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, who are likely to raise rates in response.
“Early signs are that the markets – who will have to lend the money required to plug the gap in the government’s fiscal plans – aren’t impressed. This is worrying.
“Government borrowing is set on an upward path. It will reach its third-highest peak since the war, and remain at well over £100 billion, even once the energy support package is withdrawn.
“And we heard nothing on public spending. It seems almost inconceivable that plans made last year, when inflation was expected to peak around 3%, will not need topping up 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 also. Mr Kwarteng is not just gambling on a new strategy, he is betting the house.”
Kwarteng betting the house, says IFS, ‘with no effort to make finances add up’
The Institute for Fiscal Studies has warned that Kwasi Kwarteng is “betting the house” with his vast tax cuts, putting government debt on an “unsustainable rising path”.
Director Paul Johnson accused him of outlining the biggest package of tax cuts in 50 years “without even a semblance of an effort to make the public finance numbers add up”.
“Instead, the plan seems to be to borrow large sums at increasingly expensive rates, put government debt on an unsustainable rising path, and hope that we get better growth.
“This marks such a dramatic change in the direction of economic policy-making that some of the longer-serving cabinet ministers might be worried about getting whiplash.”
Growth plan will rebuild economy, claims Truss
Liz Truss said the government’s economic vision would set out “how we are going to rebuild our economy and deliver for the British people”.
She tweeted: “Growth is key to delivering more jobs, higher pay and more money to fund public services, like schools and the NHS.”
But one critic said the only growth would be that of food banks and poverty.
Full story: Sturgeon reaction to mini-Budget
The super wealthy are “laughing all the way to the actual bank”, Scotland’s first minister has said after the chancellor unveiled plans he said would drive economic growth.
Read more about her reaction here:
Sturgeon: Super wealthy ‘laughing all the way to the bank’ after mini-budget
Chancellor Kwasi Kwarteng announced a so-called mini-budget on Friday.
Levelling up minister defends tax cuts
A levelling up minister has sought to defend tax cuts amid fierce criticism:
Opinion: Mini-Budget is huge, risky and ideological
“This is an experiment conducted in real time in the world’s sixth largest economy – an economy that has not been performing very well for the past decade,” Hamish McRae writes.
Read his take on the mini-Budget here:
Risky, ideological: This is more important than any Budget in decades | Hamish McRae
Stand back a moment. This is an experiment conducted in real time in the world’s sixth largest economy – an economy that has not been performing very well for the past decade
Gordon Brown: Billions ‘lavished’ on rich at expense of poor
Gordon Brown is not a fan of the mini-Budget, saying millions will suffer “not because we are a poor country” but an “ever more unequal one”.
“The gap between rich and poor continues to widen as the government lavishes billions on the already wealthy at the expense of the new poor,” he tweeted.
The former Labour prime minister said the removal of the bonus cap for bankers, cuts to corportation tax and rejection of further windfall tax on energy giants will “mercilessly underline that a winter of destitution” for millions.
‘Vast void’ in Kwarteng plan, says senior Tory
Senior Tories have shared their fears about Liz Truss and Kwasi Kwarteng’s tax-cutting agenda.
Former Treasury minister John Glen said there were “irreconcilable realities” in the plans to borrow more cash to cut tax at the same time as inflation was rising.
Mel Stride – chair of the Treasury select committee – said there was “a vast void” at the centre of the plan because of the lack of an independent Office for Budget Responsibility (OBR) forecast.
The Rishi Sunak supporter said an OBR assessment was vital if the government was to make changes “in a fiscally responsible manner”.
The government has committed to an OBR forecast before Christmas, followed by another forecast before the end of the financial year in spring.
A proper Budget was expected in November. But the Treasury officials would not commit to a proper budget by Christmas – saying only it would happen “within this financial year”.
Opinion: Kwarteng is at the wheel of the Budget like a boy racer
“Watching Kwasi Kwarteng leaning hard into his growth argument – hoarse and at times gabbling his way through his budget-that-isn’t-a-budget – I wondered what he reminded me of,” Sean O’Grady writes.
“Then, with all his talk of ’unleashing’ economic potential and ’unshackling the creative energies’ of the UK I realised: a boy racer who suddenly finds himself in charge of a supercar, and really can’t believe his luck.”
Find his thoughts on the mini-Budget here:
Kwarteng handled the Budget like a boy racer who can’t grip the wheel | Sean O’Grady
Like many a joy rider, Kwarteng’s boundless self-confidence and bravado far outstrips his actual skills as a driver
