Prime Minister Liz Truss has defended her Government's controversial tax cuts as she vowed to 'usher in a decade of dynamism'. Truss has come under fire from Labour who accused the Prime Minister and Chancellor Kwasi Kwarteng of gambling with people’s finances in 'casino economics', and claimed their 'trickle-down' approach will leave the next generation worse off.
But Ms Truss insisted she is 'unapologetic' in 'focusing relentlessly on economic growth', even as the £45 billion tax-slashing package sent the pound tumbling to fresh 37-year lows and sparked a backlash among some of her own MPs. Using more than £70 billion of increased borrowing, Mr Kwarteng on Friday unveiled the biggest programme of tax cuts for 50 years, including abolishing the top rate of income tax for the highest earners.
The Resolution Foundation said Mr Kwarteng’s package will do nothing to stop more than two million people falling below the poverty line. Analysis of the mini-budget by the think tank said 'only the very richest households in Britain' will see their incomes grow as a result of the tax cuts.
READ MORE : Eight key announcements Kwasi Kwarteng made in mini-budget
The wealthiest five per cent will see their incomes grow by two per cent next year, while the other 95 per cent of the population will get poorer as the cost-of-living crisis continues. The Institute of Fiscal Studies (IFS) said only those with incomes of over £155,000 will be net beneficiaries of tax policies announced by the Conservatives over the current Parliament, with the 'vast majority of income tax payers paying more tax'.
IFS director Paul Johnson told BBC Breakfast: "If you’ve got less than about £150,000 a year coming in, if you’re part of the 99 per cent with less than £150,000 coming in, then you’re still going to be worse off as a result of tax changes coming in over the next two or three years." But Ms Truss defended her high-risk strategy designed to revive the UK’s stagnant economy.
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In article for The Mail on Sunday, the Prime Minister wrote: "Growth means families have more money in their pockets, more people can work in highly paid jobs and more businesses can invest in their future. It provides more money to fund our public services, like schools, the NHS and the police.
"We will be unapologetic in this pursuit… everything we do will be tested against whether it helps our economy to grow or holds it back." Repeating her pledge to do things differently from previous Conservative administrations, she said: "We will usher in a decade of dynamism by focusing relentlessly on economic growth."
Ms Truss also brushed off suggestions the measures could be fiscally irresponsible. In an interview with CNN, she was asked about the responsibility of her economic plan.
"I don’t really accept the… premise of the question at all," she told the US broadcaster. "The UK has one of the lowest levels of debt in the G7, but we have one of the highest levels of taxes. Currently, we have a 70-year high in our tax rates."
Mr Kwarteng said he looks forward to 'proving the naysayers wrong' over his 'mission to encourage investment and drive growth'. "I want to reassure you that with our growth plan everyone wins. This is a plan that cuts taxes for all, not just the wealthy,” the Chancellor wrote in The Sun.
"With this intervention, we will turbocharge the economy, creating more businesses, jobs and raised living standards which will directly benefit every single person."
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