LIZ Truss will today unleash the biggest tax cuts bonanza since the 1980s to make millions of Brits better off within weeks.
Her Chancellor Kwasi Kwarteng will unveil a “mini-Budget” to axe the National Insurance hikes and scrap the planned Corporation Tax rise.
He will reveal the whopping package to MPs in a statement today at 9:30am – and could pull out a showstopper surprise announcement.
Mr Kwarteng is also set to cut Stamp Duty so more people can buy a house and in turn help fire up the economy.
Benefit claimants will face tougher penalties for failing to look for work.
Promising a “new era” for Britain, Mr Kwarteng will announce 38 low-tax zones to get business booming.
The Chancellor will tell MPs: “Growth is not as high as it needs to be, which has made it harder to pay for public services, requiring taxes to rise. We are determined to break that cycle.”
The massive tax bonfire – the biggest since Margaret Thatcher’s Budget in 1988 – is a huge gamble as Ms Truss goes for broke on her mission to get economic growth.
Read our Mini Budget 2022 live blog below for the latest…
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Liz’ Big Gamble
Of course, more so than the actual policies today, politically it’s a huge shift for the new PM Liz Truss.
She’s ripping up the fiscal rulebook in a bid to try and get the economy growing faster than it has in decades.
Sources have said this will be a “seismic shift” for British politics – with economists saying these tax cuts haven’t been seen since the days of Thatcher.
She’s not got long to make a difference.
There’s just around two years before the next election to make a difference and get the economy moving again.
Tory MPs worried about the cost of all this are going to be looking at her plan to help families and pay off by then – or it’ll all be over.
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What’s an investment zone anyway?
Promising a “new era” for Britain, the Chancellor will today announce 38 low-tax zones to get business booming.
Essentially, it will be an area of the country which will get special tax status – so it will make it more attractive for firms to set up there.
It’s likely that these models – where regulations will be slashed and other rules disbanded – could be a model for growth across the entire nation… if they work that is.
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Who will pay for the tax cuts?
Liz Truss’ tax cuts will run into the tens of billions of pounds, with estimates putting the package at around £50billion.
During the Tory leadership campaign the PM said that her tax cuts would be paid via additional borrowing, which Britain would start paying back after three years.
She has vowed to not introduce any new taxes.
The IFS reckons her tax cuts will blow a £100billion hole in the economy by 2025 and put debt on an “unsustainable path”.
So she’s taking a massive gamble…
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When is a Budget not a Budget?
When it’s a Mini-Budget. Or as the Chancellor has dubbed today’s announcement – a “Growth Plan”.
It means Kwasi Kwarteng will not pose with the famous red box outside No11 Downing Street, and nor will there be an official forecast of the nation’s finances.
But make no mistake – today is a huge event that will see the government spend tens of billions of pounds.
The Institute for Fiscal Studies claims Mr Kwarteng will announce “the biggest tax-cutting fiscal event since Nigel Lawson’s Budget of 1988”.
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Kwasi Kwarteng arrives at Downing Street ahead of Mini-Budget
The Chancellor was all smiles as he entered No10 this morning to update the Cabinet on his plans for the economy.
He will be up in the Commons at 9.30 if it does not get pushed back by any Urgent Questions.
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What can we expect from the Mini-Budget?
While Budgets are supposed to be kept tightly under wraps, we know some elements of what will be announced today.
Very likely:
- Reversing last April’s 1.25 percentage point rise in National Insurance from November 6
- Scrapping the planned rise in Corporation Tax from 19 to 25 per cent
- Cutting stamp duty, potentially by doubling the thresholds
- Cutting business taxes in 38 new investment zones
Possible:
- Knocking a penny off the basic rate of income tax by bringing forward the 1p cut planned for 2024
- Cutting VAT. Ms Truss was previously considering shaving 10 per cent off the sales tax
- Extending the 5p fuel duty cut set to expire in March
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Cabinet Minister denies Liz Truss wants “trickle down economics”
Levelling Up Secretary Simon Clarke said it was “nonsense” Liz Truss favours “trickle down economics”.
The economic idea is that even if you make the rich richer their wealth will pass down to the poorest, and so everyone is better off.
But Mr Clarke said this morning: “This whole term trickle-down is such a nonsense and is itself a centre-left mischaracterisation of what this Government is all about. We need to grow the economy because a more successful economy is good for everybody.”
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Truss goes for growth
Liz Truss has promised to “unleash” Britain’s potential hours before she gambles on a huge tax-cutting mini-Budget.
The PM released a video with Chancellor Kwasi Kwarteng where the pair outline their vision to grow the economy.
Details of the mega package will be unveiled by Mr Kwarteng in the Commons at 9.30 this morning.
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What time is the mini budget announced today?
The highly anticipated mini budget could include NI cuts, and a pension triple lock.
The mini budget will be revealed today at around 09:30am.
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What can we expect?
We are expecting to see the Chancellor announce Liz Truss‘ plan ‘to cut Stamp Duty’ and help Britain’s drive economic growth – with Whitehall sources saying the move could be a “rabbit” out of the hat in Mr Kwarteng’s planned speech.
The Chancellor will also reveal more than 100,000 people in part-time work could face a benefit cut if they fail to actively seek more work in a major shake-up of the welfare system.
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New £500m social care discharge fund announced
Health and Social Care Secretary Therese Coffey on Thursday announced a £500 million social care discharge fund.
In response to calls for the Government to honour its £13bn social care pledge, Ms Coffey described the initiative as a “down payment” before the development of longer-term plans.
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Calls for Liz Truss to honour £13bn social care plegde
Councils are pressuring Liz Truss to honour her promise to put £13bn into social care.
If comes after Thursday saw the Government confirm it will scrap the newly introduced National Insurance levy.
Chancellor Kwasi Kwarteng said the tax hike will be reversed from November 6.
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Tax cuts promised from ‘day one’
PM Liz Truss promised tax cuts from “day one” if she successfully made her way in to No 10.
Today we’ll get an idea of what her economic policy will look like and how Brits can be better off during the cost of living crisis.
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‘New era’ to begin today
Kwasi Kwarteng will today deliver his plan to boost the economy and make families better off within six weeks.
Promising a “new era” for Britain, he will announce 38 low-tax zones to get business booming.
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The National Insurance cut – what you could save
It has been announced by the Business Secretary Kwasi Kwarteng this afternoon that a reduction will be made on 6 November.
- £10,000 salary: No change as you don’t pay National Insurance
- £15,000 salary: £30 a year
- £20,000 salary: £93 a year
- £25,000 salary: £155 a year
- £30,000 salary: £218 a year
- £35,000 salary: £280 a year
- £40,000 salary: £343 a year
- £45,000 salary: £405 a year
- £50,000 salary: £468 a year
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UK’s economic timeline to be published
The Chancellor has announced that the economic forecast from the Office for Budget Responsibility (OBR) will be provided.
It was revealed that the Treasury Committee wrote to Mr Kwasi Kwarteng, urging him to release the data along with the mini budget tomorrow.
In a letter responding to the committee, the Chancellor said: “In the first days of the new Government, we have provided significant support for households and businesses and are acting swiftly to set out a growth plan to Parliament on Friday.
“We remain committed to two forecasts in this fiscal year, as required by legislation. I will provide an update on the timetable for an OBR forecast during my statement to the House on September 23.”
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MP response to Universal Credit crack down plans
The Shadow Work and Pensions Secretary has spoken out against the government plans to sanction those who are not actively looking for work while claiming benefits.
“So Tory ministers think [the] reason we have over a million vacancies is because the low paid aren’t working hard enough and need to be threatened with sanctions but bankers needs bumper bonuses.
“We need a serious plan to support people to return to work & increase labour supply,” tweeted Mr Ashworth.
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Reversal of the NI hike praised by campaigners
The boss of pressure group Taxpayers Alliance has celebrated the decision to reverse the NI increase.
TaxPayers’ Alliance campaign group, said: “It’s long past time that the government abandoned this punishing tax hike on working people and employers alike.
“It never made any sense to introduce a tax which would see a huge hit to jobs and growth, just as the country was trying to get back on its feet.
“The Chancellor should go further on Friday and ensure this mini-Budget is a growth game-changer.”
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What is a recession?
The Bank of England has warned the UK may “already” be in a recession, here is a (very basic) break down of what this means…
- Recession means the halt or reverse of the nation’s economic growth, as the GDP (gross domestic product) increases, that’s the amount of goods and services the UK provides.
- When the GDP shrinks, for more than six months, it is considered to be a recession.
- With a growing economy, the more money the government has to fund public services, but if it shrinks, the less there is for things like the NHS, local councils, etc.
- A recession can result in the loss of jobs as companies lose money, or pay rises might be scarce, making it difficult to keep up with the cost of living.
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Liz Truss plans to target the ‘economically inactive’
Liz Truss has claimed that Britain will be “unashamedly pro-business” during her time as PM.
During her address in New York she said she wants to target the “economically inactive” to “encourage more of them to go into work”.
The “economically inactive” consists of around nine million people, with many either not in work or not looking for a job.
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UK may ‘already’ be in recession as interest rates soar higher than 2008 levels
The Bank of England has confirmed an inflation increase of 2.25 per cent.
“Should the outlook suggest more persistent inflationary pressures, including from stronger demand, the Committee will respond forcefully, as necessary,” the BoE said.
Interest rates have hit a 14 year high.
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Dividend tax cut to come into effect in April 2023
It is hoped that the cut will encourage more “support for entrepreneurs and investors” to grow the UK economy.
This will come into force in April 2023, and it is thought that on average it could save taxpayers £345 per year.
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UK borrowing could hit £100 billion a year
A respected financial research group has warned that the mini budget and government plans to tackle a looming recession could result in increasing the UK debt.
The Institute of Fiscal Studies warned that Liz Truss’s government could put public finances on an “unsustainable path”.
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NI cuts won’t protect families on low wages
The government has announced a halt in increasing national insurance, meaning there will be a 1.25 per cent decrease in contributions on 6 November.
National insurance is only charged for those earning £12,570 a year.
Therefore the more you earn, the more you can save on this contribution. It won’t make a huge difference to those on lower wages.
It was reported by the Mirror that the Institute for Fiscal Studies announced that it will give the poorest tenth just £7.66 a year. while the richest tenth save £1,801.89.
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UK economy will enter recession, BoE claims
Senior Sun money journalist Lucy Alderson writes how the the Bank of England has warned that the UK economy will officially enter recession by the end of the month.
A country is in recession when its economy shrinks over a sustained period of time, rather than growing normally.
A slowdown in retail spending and manufacturing output has prompted the Bank of England to say that it expected UK GDP to have fallen by 0.1 per cent in the three months to the end of August – indicating the country is already in recession.
This is below its projections of a 0.4 per cent growth and marks a second successive quarterly decline.
It said there had been a smaller-than-expected bounce back from the Jubilee bank holiday and warned there would be an economic hit from the extra holiday for the Queen’s state funeral.
It takes two quarters of shrinking growth for economists to qualify a downturn as recession.
