Political suicide? Kwarteng’s plan to cut taxes and increase borrowing
Kwasi Kwarteng.
Kwasi Kwarteng says he wants to boost economic growth with a seismic series of policies – but will he simply tip the nation into enormous, unmanageable debt instead?
And, if Liz Truss is expecting to lose a future election, are the Tories planning to use this against a possible future Labour government, as they have with any number of false accusations in the past?
Here’s what Kwarteng has announced, according to the BBC:
– The basic rate of income tax will be cut by 1p to 19p from April 2023
– The 45p tax rate for top earners over £150,000 will be abolished, also from April next year
– The level at which house-buyers begin to pay stamp duty is doubled from £125,000 to £250,000
– First-time buyers will pay no stamp duty on homes worth £450,000, up from £300,000
– Planned rise on corporation tax from 19% to 25% is scrapped
– A 1.25% rise in National Insurance to be reversed from 6 Novemnber
– Cap on bankers’ bonuses, which limited rewards to twice the salary level, is axed
– Cost of subsidising both domestic and business energy bills will cost £60bn for the next six months
-Strike action: unions will be required to put offers to members during pay talks
– UK to introduce sales tax-free shopping for overseas visitors
“Money Saving Expert” Martin Lewis was among the first to raise concerns, describing the Chancellor’s statement as “staggering”.
He tweeted: “That really was quite a staggering statement from a Conservative party government
“Huge new borrowing at the same time as cutting taxes.
“It’s all aimed at growing the economy. I really hope it works. I really worry what happens if it doesn’t.”
If it doesn’t, the UK will be plunged into a huge amount of debt because it will not be able to support the amount of borrowing Kwarteng is proposing.
Campaigners and charities have described the mini-budget measures as a ‘hammer blow’ to the poor.
Becca Lyon, head of child poverty at Save the Children, said:
The prime minister said she would deliver on the cost-of-living crisis. Instead, the UK government has delivered tax cuts to help the richest and a hammer-blow to low-income families.
The chancellor has prioritised bankers’ bonuses over helping vulnerable children through the cost-of-living crisis, whose hard-working parents face impossible choices.
Today’s announcements overwhelmingly benefit the country’s wealthiest households, meanwhile almost four million children risk going cold and hungry this winter.
Alison Garnham, chief executive at the Child Poverty Action Group, said:
Today was a vital opportunity to provide reassurance and support to those who need it the most – but instead the Government risks a collision with reality, and the four million kids currently living in poverty in the UK will be forced to pay the price.
Imran Hussain, director of policy and campaigner at Action for Children, said:
If the new chancellor has money to spend on tax cuts for those who are relatively better off, then he has the money to spend throwing a lifeline to low-income families who are desperately struggling with the cost-of-living crisis. Many now face a bleak Christmas.
Whilst the energy price guarantee will help offset the near apocalyptic rises that had been predicted, it doesn’t address the mounting pressures families face with food, fuel, housing and other costs that continue to climb.
And Mark Russell, chief executive at the Children’s Society, said:
Changes to the tax system right now are barking up the wrong tree … We need to see far more direct support for families bearing the brunt of the cost-of-living crisis.
Still, what can you expect from a Chancellor who was seen muttering to himself and grinning like a drug-addled fool at the Queen’s funeral on Monday?
I was 20 years in the rock n roll business & I know high when I see it.
This guy is coked up to his dilated eyeballs. pic.twitter.com/ZMRmLhQVAg
— Former Labour SPAD. (@RedEyedSprite) September 21, 2022
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