Mini-Budget 2022 final: Kwarteng bets the house on huge tax cuts, says IFS

Energy bill package will cost £60bn in first six months, Chancellor Kwasi Kwarteng says

Kwasi Kwarteng has unveiled the largest string of tax cuts in half a century, critics say favoring the rich and big business, in a mini-budget that has been labeled unsustainable by tax experts.

In a scathing assessment, the Institute of Fiscal Studies said the chancellor “betted the house” by placing the national debt on an “unsustainable upward path”.

The pound plunged to a 37-year low after Mr Kwarteng unveiled his plan aimed at raising declining living standards by boosting growth.

With more than £70 billion in additional loans, he scrapped the highest income tax rate for the highest earners.

He also cut stamp duties on homebuyers and proposed a reduction in the basic income tax rate to £19p by April as part of tax cuts costing up to £45bn a year.

Mr. Kwarteng confirmed plans to lift the cap on bankers’ bonuses while adding restrictions to the social security system.

But the price of government bonds rose even higher, fearing the package would collapse in UK markets.

TUC leader Frances O’Grady said: “This budget is Robin Hood in reverse.”

Rachel Reeves, the shadow chancellor, said it was “a plan to reward the already rich”.

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Ban on onshore wind farms abolished

Environmentalists and renewable industry leaders have tentatively welcomed the plan to end a de facto ban on onshore wind farms in England, which could theoretically lead to cheaper electricity generation. Adam Forrest reports:

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Dividend tax good for businesses, savers and retirees, says expert

A tax expert has described the mini-budget as “incredible, staggering and unbelievable”.

Nimesh Shah, chief executive at leading tax and consulting firm Blick Rothenberg, said it contained “tax-cutting measures not seen in a generation”.

“Kwarteng was bold in his claims that he wanted a simpler, more dynamic and fairer tax system, and you could say he backed that up with his box of tax-cutting tricks,” said Mr Shah.

In addition to the corporate tax cut, Mr Shah said the 6.85 percent cut to the highest dividend tax rate was good news for entrepreneurs and the self-employed who receive dividends, as well as savers and retirees with investment portfolios.

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National insurance increases while corporate tax is lowered

National insurance policies have gradually increased over the past 40 years, figures show. The chancellor has canceled the latest planned increase due to funding social care.

Meanwhile, corporate taxes have been cut in the past 12 years since the Conservatives returned to power:

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The Chancellor of the Exchequer claims the pound has risen – as it hits its lowest point in 37 years

A finance minister turned red after claiming the tax-cut mini-budget had boosted the value of the pound – moments before it plunged to a 37-year low:

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Lack of help for unpaid carers ‘means greater costs to society later on’

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 care obligations.

Emily Holzhausen from Carers UK said: “The measures we have asked for to support unpaid carers more with the current cost of living are completely lacking, leaving millions of carers in the UK facing unprecedented financial hardship this autumn and winter.

“Many carers tell us they can’t pay essential bills, are cutting back on food and heating, and remain desperately concerned about this winter, which will undoubtedly mean higher costs for government and society beyond.

“Carer’s Allowance and means-tested benefits should be increased immediately this fall in line with inflation.”

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Borrow to reach third-highest peak since war, expert says

IFS Director Paul Johnson added: “Mr. Kwarteng has shown that he is willing to gamble with fiscal sustainability to push through these massive tax cuts.

“He is willing to shake off the risks of inflation and to invite significantly higher interest rates. By injecting demand into this high inflation economy, the government is heading in the exact opposite direction of the Bank of England, which is likely to raise interest rates in response.

“The first signs are that the markets – which need to borrow the money needed to close the gap in the government’s budget plans – are unimpressed. This is worrying.

“Government loans are on an upward path. It will reach its third highest since the war and remain well above £100 billion even if the energy support package is withdrawn.

“And we haven’t heard anything about government spending. It seems almost inconceivable that plans made last year, when inflation was expected to peak around 3%, will at some point not need to be topped up unless the government is willing to allow a (further) deterioration in supply and quality. of public services.

“Presumably this government would also borrow for that. Mr. Kwarteng is not only betting on a new strategy, he is betting on the house.”

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Quarter gambles on the house, IFS says, ‘without effort to get the finances right’

The Institute for Fiscal Studies has warned that Kwasi Kwarteng’s massive tax cuts are “putting the house on the line”, putting the national debt on an “unsustainably rising path”.

Director Paul Johnson accused him of sketching the largest package of tax cuts in 50 years “without even the semblance of an attempt to make the public finance numbers add up”.

“Instead, the plan seems to be to borrow large amounts at increasingly expensive rates, put government debt on an unsustainable upward path and hope 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 may be concerned about getting whiplash.”

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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 help 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.”

But one critic said the only growth would be from food banks and poverty.

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Full Story: Sturgeon Response to Mini-Budget

The super-rich are “laughing all the way to the bank,” Scotland’s prime minister said after the chancellor unveiled plans he said would boost economic growth.

Read more about her response here:

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Leveling minister defends tax cuts

A leveling minister has sought to defend tax cuts amid fierce criticism:

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