Prime Minister Liz Truss and Chancellor Kwasi Kwarteng are set to deliver a 'mini budget' on Friday (September 22) to detail the government's plans to tackle the soaring cost of living.
Ms Truss has previously pledged to hold an "emergency budget" within weeks of becoming leader of the Conservative Party, however, plans were forced to wait in light of Queen Elizabeth II's death. Friday's 'mini budget' will not hold the same weight and significance as a full Budget - meaning it will likely emit any changes to duties on cigarettes, alcohol, and fuel.
It is believed that the announcement will focus on tax-cutting, boosting investment and driving growth. Kwarteng is expected to use the “fiscal event” to set out details of how the government will fund the energy price freeze announced earlier this month by Truss, while confirming plans to scrap the planned increase in corporation tax and reverse the hike in national insurance.
The government is avoiding the term Budget for Friday's event because it will mean there will be no requirement for the Office for Budget Responsibility to produce forecasts of how the plans will affect public spending and borrowing. However, it has been reported that Ms Truss will borrow as much as £150 billion to fund the two-year energy bill freeze she previously announced. Ms Truss has said the cost to the taxpayer is “not what has been projected”.
Here is everything we know ahead of the the announcement...
Energy bills and financial support
Earlier this month, Truss announced that domestic energy bills will be frozen at £2,500 as part of "two year energy price guarantee" to alleviate households' financial struggles during the cost of living crisis. A similar scheme will be in place for businesses, schools, hospitals, other public organisations and charities.
While it will "offer equivalent support", it will only last for six months. It is believed the mini-budget will set out how the government will fund the already-promised measures.
Stamp duty cut
It has been reported that a cut in the stamp duty tax that homeowners have to pay will be made. The move could help more young people get a foot onto the property ladder, reports The Times.
The news comes a year after the last stamp duty holiday which was brought in to boost the property market during the coronavirus pandemic. It was introduced back in July 2020 by former Chancellor Rishi Sunak and ended in September 2021.
National Insurance hike reverse
The Chancellor confirmed the national insurance increase which came into effect in April will be reversed from November 6. Ahead of Friday's mini-budget, he said: “Taxing our way to prosperity has never worked.
"To raise living standards for all, we need to be unapologetic about growing our economy. Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the levy will help them grow, whilst also allowing the British public to keep more of what they earn.”
The 1.25 percentage point increase in national insurance was announced by former chancellor Rishi Sunak to help fund health and social care.
Scrapping corporation tax increase
Corporation tax - which is based on the annual profits a company makes - was due to increase from 19% to 25% in April 2023. The measure was announced by previous Prime Minister Boris Johnson.
However, it's thought that Truss will cancel the rise.
Scrapping the cap on bankers’ bonuses
Bankers may receive unlimited bonuses with the government reportedly considering scrapping a cap on bonuses - currently capped at twice the employee's salary.
Banking chiefs have reportedly complained that the cap is driving up salaries and making the UK less attractive than the US or Asia.
Universal Credit rules set to be tightened
The welfare system is due to be shaken up under new measures. Universal Credit claimants working up to 15 hours a week on the National Living Wage will be required to meet regularly with a work coach and to take “active steps” to increase earnings.
If they fail to do so, under the plan, their benefits could be reduced. Billed by the Treasury as a gradual expansion, the move will be an increase from the incoming 12-hour threshold for a more intensive work search regime and is expected to take effect from January as part of the Universal Credit system.
Mr Kwarteng has described the policy as a “win-win”, pitching it as a way to fill 1.2 million job vacancies across the country. Under the changes, claimants aged over 50 will also get extra support from work coaches, while the newly unemployed will receive nine months of targeted sessions.
Read next:
