Chancellor hints more tax cuts are on the way
Kwasi Kwarteng claimed his tax cuts “favour people right across the income scale” amid accusations they mainly help the rich, and hinted more are on the way.
The Chancellor defended his programme of tax cuts – the biggest for 50 years – which he announced on Friday using more than £70 billion of increased borrowing.
Analysis suggests the measures, which include abolishing the top rate of income tax for the highest earners, will see only the incomes of the wealthiest households grow while most people will be worse off.
But Mr Kwarteng insisted he is “focused on tax cuts across the board”.
When it was put to him that his measures “favour overwhelmingly people at the very top”, Mr Kwarteng told the BBC’s Sunday With Laura Kuenssberg programme: “They favour people right across the income scale.”
Three days after his fiscal statement, the Chancellor also indicated his announcements were just the beginning of his agenda designed to revive the UK’s stagnant economy.
He said: “We’ve only been here 19 days. I want to see, over the next year, people retain more of their income because I believe that it’s the British people that are going to drive this economy.”
Mr Kwarteng and Prime Minister Liz Truss could continue their spree in the New Year with possible further reductions in income tax and the loosening of immigration rules and other regulations.
The Chancellor brushed off questions about the markets’ reaction to his mini-budget.
The £45 billion tax-slashing package was met with alarm by leading economists, some Tory MPs and financial markets – with the pound tumbling to fresh 37-year lows.
Asked whether he was nervous about the diving pound, falling stock markets and rising cost of government borrowing, Mr Kwarteng said: “We’ve got to have a much more front-footed approach to growth and that’s what my Friday statement was all about.
“I think that if we can get some of the reforms … if we get business back on its feet, we can get this country moving and we can grow our economy, and that’s what my focus is 100% about”.
He refused to comment on market movements.
“I’ve been focused on the longer term and the medium term, and I think it was absolutely necessary that we had a long-term growth plan,” he said.
Economists predict sterling could plunge to parity with the US dollar by the end of the year.
Such a slump could trigger a rebellion from Tory backbenchers, who could refuse to vote for the Government’s finance bill or submit letters of no confidence, the Telegraph reported, citing backers and critics of the Prime Minister.
Asked whether he has confused the public by pumping money into the economy while the Bank of England raises interest rates in a bid to curb inflation, Mr Kwarteng said the Government had to change tack due to the Covid-19 pandemic and the Russia’s invasion of Ukraine.
“We had two multigenerational unprecedented events,” he said.
“There’s no way that a government couldn’t have … shouldn’t respond in a fiscally expansive way, in a way that we can support the economy, support our people through these two unprecedented shocks.”
The Chancellor was also asked whether there is a limit on borrowing, after the IFS think tank said he is “betting the house” by putting Government debt on an “unsustainable rising path”.
“Obviously you can’t borrow forever,” he replied, while refusing to put a limit on government borrowing.
“If there is an exogenous extreme event, I can’t possibly say that we won’t borrow to deal with that”.
Labour called the plans an admission of 12 years of Tory economic failure.
Greater Manchester mayor Andy Burnham described the mini-budget as a “flagrant act of vandalism on the social cohesion of this country”.
But Ms Truss declared she is “unapologetic” in “focusing relentlessly on economic growth”.
In an 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.”
Published: by Radio NewsHub