Advertisement
Social Justice

Kwasi Kwarteng remains tight-lipped over how huge tax cuts will be funded

It was the first time the chancellor has addressed parliament since the fallout from his mini-budget

Kwasi Kwarteng has come under fire for “sabotaging the country’s economic credibility” as he remains tight-lipped over how his huge tax cuts will be funded.

The chancellor addressed MPs for the first time in parliament since the fallout from his mini-budget, after a two-week recess from parliament for annual party conferences.

Liz Truss and Kwarteng have promised economic growth, mainly delivered through tax cuts which they claim will give individuals incentives to work harder and invest more. 

Kwarteng told the House of Commons on Tuesday they set out the growth plan which will get the country out of “the high tax, low growth cycle we are currently trapped in” after 12 years of Conservative government. He said this will put more money in people’s pockets and raise living standards. 

But the chancellor is yet to confirm how those cuts will be funded. The Institute for Fiscal Studies has warned “painful” spending cuts of around £60billion a year will be needed by 2026/2027 if the government is going to meet its targets for economic growth. 

This is likely to hit public services, prompting outcry from campaigners and councillors who warn communities are “already crumbling from neglect” after 12 years of austerity. 

Advertisement
Advertisement

The chancellor also once again refused to confirm whether benefits would be increased in line with inflation, saying “no decisions have been made”. Chris Philp, the chief secretary to the treasury, added he was “not going to offer any running commentary on internal discussions” around benefits. 

A U-turn on Rishi Sunak’s promise to increase benefits next year would be a “devastating blow” to low-income households struggling with the cost of living crisis, charities have warned. James Taylor, at disability charity Scope, said increasing universal credit in line with wages rather than inflation — a real-terms cut — would lead to disabled people starving and freezing in their own homes. 

Instead, Kwarteng reiterated the freeze to the energy price cap, which meant the average household bill rose to £2,500 rather than £3,500 in October. He said there is a “huge amount of intervention this government is committing to”, adding that his “priority is making sure everyone can get through these challenging times as best they can”. 

Even with the energy price cap, the average household will still pay more than double what they were paying earlier this year. 

Get the latest news and insight into how the Big Issue magazine is made by signing up for the Inside Big Issue newsletter

It comes as the Bank of England warned of a “material risk” to financial stability, taking emergency action for the third time since Kwarteng’s mini-budget announcement in an attempt to calm investors.

Last week, the chancellor U-turned on plans to cut the top rate of income tax. The policy had been branded for the “richest one per cent while the poorest were forced to pay the price”.

Dame Angela Eagle, the MP for Wallasey, criticised the chancellor for the “chaos of the mini-budget with its £45 billion of unfunded spending commitments and taxes”. 

And the Shadow Chancellor Rachel Reeves said it is a “British crisis made in Downing Street”. 

“No other country is sabotaging their own country’s economic credibility as this country is,” she added. 

Tory ministers, including the chancellor, hit back at critics and joked that they had firmly booked themselves a place on the so-called “anti-growth coalition”. 

The chancellor confirmed he will fast-track his medium-term plan to October 31 following mounting pressure from MPs. It will be published alongside fresh forecasts for the economy from the Office for Budget Responsibility.

Your support changes lives. Find out how you can help us help more people by signing up for a subscription

Advertisement

Every copy counts this Winter

Your local vendor is at the sharp end of the cost-of-living crisis this Winter. Prices of energy and food are rising rapidly. As is the cost of rent. All at their highest rate in 40 years. Vendors are amongst the most vulnerable people affected. Support our vendors to earn as much as they can and give them a fighting chance this Winter.

Recommended for you

Read All
Time to Talk: 'Don't let your debt and mental health struggles bury you'
Time to talk day

Time to Talk: 'Don't let your debt and mental health struggles bury you'

A disabled woman has been left without a toilet or shower for months by her healthcare provider
Disability

A disabled woman has been left without a toilet or shower for months by her healthcare provider

This map shows you where to find a warm bank near you this winter
Winter survival guide

This map shows you where to find a warm bank near you this winter

Free school meals: Everything you need to know
Free school meals

Free school meals: Everything you need to know

Most Popular

Read All
Lauren Layfield: 'Normal men, innocent men' and me
1.

Lauren Layfield: 'Normal men, innocent men' and me

Here's when people will get the next cost of living payment in 2023
2.

Here's when people will get the next cost of living payment in 2023

Where to find grants for furniture and carpets in 2023
3.

Where to find grants for furniture and carpets in 2023

Scotland aims to cut car use by creating '20-minute neighbourhoods' in net zero push
4.

Scotland aims to cut car use by creating '20-minute neighbourhoods' in net zero push