THE Tories’ emergency mini-budget has been branded a recipe for “economic chaos” as the country faces the likely recession amid warnings there will be further and “inevitable public sector cuts”.
Chancellor Kwasi Kwarteng announced his much-trailed economic plans in the Commons on Friday, including measures to cut income tax for the wealthy, end the cap on bankers’ bonuses and further restrict the activities of trade unions.
He was branded a “reverse Robin Hood” amid accusations the Government is presiding over a “broke, broken Britain”.
State borrowing will be greatly increased to fund measures to ease the tax burden on the wealthy and on profitable businesses.
'This right-wing, Thatcher-cosplaying shambles of a government are making choices they'll never feel the consequences of' 👏 Watch as @alisonthewliss brilliantly takes apart the 'madness' of the latest Tory tax-cutting plans. pic.twitter.com/gf219QQIDv
— The National (@ScotNational) September 23, 2022
Kwarteng also faced criticism from some on his own side, with the Conservative chairman of the Treasury select committee Mel Stride saying he was guilty of fiscal irresponsibility by dodging having his mini-Budget scrutinised by the Office for Budget Responsibility (OBR).
'Reverse Robin Hood'
Alison Thewliss, the SNP’s Treasury spokesperson, said the Chancellor was “taking billions of pounds away from ordinary families, small businesses and our NHS, and handing it over to the richest people and biggest businesses in the UK”.
Addressing Kwarteng in the Commons, she added: “He stretches credibility beyond breaking point, saying that tax cuts for the rich, whopping bonuses for the bankers and low corporation tax for companies will somehow re-float, magically, Britain’s sinking economy.
“He has no evidence and this is no plan for growth. It is budget measures with no OBR assessment, ducking scrutiny time and time again.
“It is a plan for recession, for debt on an unsustainable trajectory and almost inevitable public sector cuts to come.
“Actively choosing to cut taxes and spend eye-watering sums to patch up a failed energy market while inflation soars, interest rates are hiked and recession looms will not create growth; it will create economic chaos.
“Nothing he has said today will provide any reassurance and give hope to ordinary people, folk struggling to get by in broke, broken Britain.”
Taxes slashed as bankers look forward to 'whopping' bonuses
The Chancellor announced the top rate of income tax, paid by those earning more than £150,000, would be cut from 45% to 40%, with the lowest rate down slightly from 20% to 19%.
The EU-imposed bankers’ bonus cap will be scrapped, he said, in a bid to attract more financial companies to the City of London.
More stringent requirements will be put on those receiving Universal Credit, with claimants facing sanctions if they do not meet regularly with a work coach and “taking steps to increase their earnings".
And Kwarteng committed to introducing further restrictions on trade unions, requiring them to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down.
He also announced the Government’s estimation of the cost of its plans to restrict the wholesale price of energy to mitigate the bills crisis would be around £60 billion for the six months from October.
Stamp duty will be cut, with Kwarteng estimating that around 200,000 people would no longer pay the tax on buying property at all. This will not apply in Scotland, where stamp duty is not levied.
Back to the future
Shadow chancellor Rachel Reeves said the Budget had shown the Tories’ true priorities calling the announcement “a plan to reward the already wealthy”.
The announcement has widened the ideological divide between the opposition and the Government, with much made by Labour, the SNP and the LibDems of the Conservatives making a marked return to the “trickle-down” economic policies of the 1980s.
Former shadow chancellor John McDonnell called the measures the “most socially-divisive Budget in a generation” and warned that “engineered [economic] booms” in the past resulted in “catastrophe”.
Sarah Olney, the LibDems’ spokesperson on business, energy and industrial strategy, said the country was now facing the “biggest and most irresponsible increase in borrowing in modern times” and said the Government would hand “£45bn of…taxes to the UK’s most profitable companies and the wealthiest individuals”.
Alba MP Neale Hanvey said the Chancellor's plans place "corporate greed and tax cuts for the rich before the needs of the people".
The mini-budget was warmly welcomed by those on the Thatcherite right-wing of the Conservative Party, with hardliner John Redwood saying there were “more obstacles to be swept aside so that we can grow more of our own food, produce more of our own energy, supply more of our own goods”.
This ties in with broader ambitions of Liz Truss’s government, which has said it is committed to making Britain a net exporter of energy by 2040.
