Money saving expert Martin Lewis has described the government’s new financial plan as “staggering” after chancellor Kwasi Kwarteng unveiled a mini-Budget filled with sweeping tax cuts.
The chancellor on Friday morning insisted “help is coming” for those struggling to pay their energy bills but also abolished the top rate of income tax for Britain’s highest earners.
He also revealed that the government’s energy bill support package could cost £60bn in the first six months from October.
Responding to the mini-Budget, Mr Lewis, founder of Money Saving Expert, 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 does.”
On the cutting of top tax rates, Mr Lewis explained: “From next April the 45 per cent top rate of tax (applies to those earning £150,000) will be scrapped. So the top rate will be the 40 per cent higher rate threshold.
“This means mega earners, pay the same rate as those on £50,000.”
Mr Kwarteng said that tax cuts are “central to solving the riddle of growth” during the current cost of living crisis.
The Treasury estimates that tax cuts, including Liz Truss’s promises to cut the rise of national insurance and corporation tax, will cost nearly £45 billion a year in 2026.
Other announcements include a cut to stamp duty, meaning 200,000 less people will pay the tax on house purchases, VAT-free shopping for overseas visitors, legal restrictions on trade unions regarding strikes and plans to make more people on Universal Credit take active steps to seek work or face having their benefits reduced.
Mr Kwarteng said his economic vision would “turn the vicious cycle of stagnation into a virtuous cycle of growth”.
But, shadow chancellor Rachel Reeves said the plan is an “admission of 12 years of economic failure” under Conservative governments.
“Never has a government spent so much and explained so little,” she said.
