'A budget for the rich'

New chancellor Kwasi Kwarteng’s mini-budget, announced today (September 23) was widely slammed as a handout for the wealthy amid a slew of unfunded tax cuts that disproportionately benefit the already well-off.

Following a long-discredited ideology of ‘trickle down’ economics, Kwarteng announced a £45bn tax giveaway to the wealthiest and big businesses.

Commenting on the announcements, Unite general secretary, Sharon Graham said, “This mini-budget is unashamedly a budget for the rich, big business and the City – highest earners’ tax slashed, corporation tax slashed, investment bankers’ bonuses let rip.

“Billionaires and city bankers will once again be considering which tax haven they will stash their money in, whilst millions of ordinary families continue to struggle to make ends meet,” she added. “If there are billions of pounds available to spend then the best way to help the economy would be to give public sector workers a pay rise.”

Among the cuts announced was a scrapping of the 45 per cent top rate of income tax – previously applied to those earning over £150,000, so that the highest rate will now be 40 per cent. This will mean that the UK’s highest earners will pay the same rate of tax as those who earn £50,000 a year. Meanwhile, the basic rate of income tax will be cut by only 1 per cent, from 20 per cent to 19 per cent next April.

The Financial Times reported that the changes to income tax will see someone earning £200,000 a year save nearly £4,500 next year on their tax bill, while a worker earning £20,000 will save little more than £200.

The Resolution Foundation think tank found that almost half of the personal tax cuts announced by the chancellor today will go to the wealthiest 5 per cent of the population, who will be overall more than £8,500 better off. Only 12 per cent of the gains from cuts to personal tax will go to the poorest half of all households.   

Kwarteng also announced that corporation tax, which was set to go up to 25 per cent next April, will stay at 19 per cent. As a result, the UK will remain the country with the lowest corporation tax rate in the G20 of advanced economies.

The chancellor said maintaining a low corporation tax rate would supposedly encourage investment, but as the IPPR think tank highlighted in a recent analysis, it has not worked before. Over the time that the UK reduced corporation tax from 30 per cent in 2007 to the 19 per cent that it is today, UK private sector investment still remains among the lowest in the OECD, the lowest in the G7 and “far below the average among developed economies”.

Other announcements in the chancellor’s mini-budget included cancelling a national insurance rise of 1.25 per cent, which was set to go into effect in April, and a cut in stamp duty after Kwarteng said stamp duty thresholds would be increased – a cut that will predominantly benefit landlords and second home buyers.

Kwarteng also confirmed he would be lifting the cap on bankers’ bonuses, a proposal that was leaked to the Financial Times earlier this month.

When the plan was first leaked, Unite general secretary Sharon Graham commented at the time, “Workers will be appalled and angry at these plans. When millions are struggling to feed their families and keep the lights on, the government’s priority appears to be boosting the telephone number salaries of their friends in the city.

“Britain’s economy is now dominated by rampant profiteering,” she said. “Removing the cap on bankers’ bonuses will make that worse. Last year Britain’s banks made £456 billion in profits. So the Chancellor’s signal to the city is ‘let it rip’ further and further, while the Bank of England lectures workers about pay restraint. You could not make it up.”

By Hajera Blagg