The UK government has announced a small budget in parliament, intends to cut household taxes and energy bills while boosting economic growth.
In what represents the most important tax cut budget since 1972, the new finance minister Kwasi Kwarteng’s sweeping new budget will cut national insurance, stamp duty and top tax rates.
In his speech to the House of Commons on Friday, Kwarteng said: “People will see the horrors of [Russia’s President Vladimir] Putin’s illegal invasion of Ukraine. They will hear reports that their already expensive energy bills could reach £6,500 ($7,254) next year.
Speaker, we will never let this happen. The Prime Minister acted very quickly to announce one of the most significant interventions the British state has ever made,” he said, referring to the new Prime Minister of the United Kingdom, Liz Truss.
Kwarteng said the budget would address three main issues: ensuring energy prices, equal support for businesses and a funding program for energy markets.
A national insurance boost announced earlier this year under former finance minister, Rishi Sunak, will be scrapped, saving households £330 ($368) a year.
The no-tax threshold for home purchases will be doubled to £250,000 and raised to £425,000 from £300,000 previously for first-time homebuyers.
At the same time, a plan was launched to cut the lowest income tax rate from 20 to 19 percent and reduce the top from 45 to 40 percent.
“High tax rates hurt UK competitiveness,” Kwarteng said. “They are less motivated to work, invest and start a business. And the higher the taxes, the more people find ways to avoid them, either working elsewhere or simply working less… instead of spending their time and money on more productive and creative purposes.” .
But in a move widely seen as controversial as the country faces a cost-of-living crisis, Kwarteng announced it would remove the European Union-inherited limit on bankers’ bonuses. post-Brexit to boost the financial services sector.
New era of development
“Growth is not as high as it should be… We need a new approach for a new era, focused on growth. Our target, in the medium term, is to achieve a trend-following growth rate of 2.5%,” said the Finance Minister.
However, Rachel Reeves, Labour’s director of financial policy, said Kwarteng had prioritized big business and “bankers’ bonuses” over working people by building on a well-established theory. credits for “trickle-down economics”.
She told parliament: “The prime minister and the prime minister (the finance minister) are like two gamblers risking their lives in a casino chasing a winning bet.
Since the announcement of the new mini-budget, the pound has fallen to a 37-year low as unreimbursed tax cuts have rocked the markets.
Many have judged that the new budget disproportionately benefits the wealthy.
Jo Maugham, director of the Good Law Project, tweeted that the budget “means people making a million a year will have an extra £54,400 ($60,700) in their pockets after taxes and NICs [national insurance contributions]”.
“For those earning £25,000 ($27,900), the equivalent figure is around £280 ($312). It is hard to imagine a worse response to the cost of living crisis. “
The government’s tax cuts are expected to cost £45 billion ($50 billion) by 2026/27.
Reaction from Wales, Scotland
Leaders from the UK’s developed regions have also criticized the tax cut plans.
“The UK government should provide meaningful support to those who need it most. Instead, they cut taxes for the rich, reward bankers and protect the lucrative profits of energy companies,” he said.
Nicola Sturgeon, Scotland’s First Minister, also echoed Drakeford’s comment, tweeting: “The super rich laugh all the way to the bank (I think many of them will also be appalled by the fact that the moral bankruptcy of the Tories) while a growing number of the rest rely on food banks – all thanks to the incompetence and recklessness of this failed governor of Great Britain.
The super rich laugh all the way to the actual bank (I suspect many of them would also be appalled by the moral bankruptcy of the Tories) while more and more people are left relying on the bank food – all thanks to the incompetence and recklessness of this. failure of the UK government
– Nicola Sturgeon (@NicolaSturgeon) September 23, 2022
The news comes as the Bank of England warns that Britain is falling into an economic recession, driven by soaring fuel and food prices. Kwarteng said the government would force transport companies to maintain a minimum level of service during the strike and require members to make salary offers during salary negotiations.
“It is unacceptable that the action of the strike is disrupting the lives of so many people,” he told parliament. Other European countries have minimum service levels to prevent militant unions from shutting down transport networks during strikes. So we will do the same.
“And we will go even further. We will legislate to require unions to put pay offers on a member vote to ensure that strikes can only be carried out when actual negotiations break down, ” he added.
However, British rail unions on Friday announced that they would join a series of strikes that had been planned for October over pay and conditions.
Members of the Sage Employees Association (TSSA) and Unite will enter industrial action in early October.
Unite general secretary Sharon Graham said in a statement: “It is disgraceful to face a three-year pay freeze during the worst cost of living crisis in decades.