Mini-budget 2022 LIVE - ambitious programme of tax cuts unveiled by Chancellor Kwasi Kwarteng
Chancellor Kwasi Kwarteng promises to 'get Britain building' with mini-budget 2022
In his first address to MPs since his appointment as chancellor, Kwasi Kwarteng has unveiled a mini-budget including £50bn worth of tax cuts in a bid to stimulate economic growth.
The mini-budget comes after the Bank of England said it believed the economy was already in recession, as interest rates were increased to 2.25%, the highest since 1998.
Kwarteng announces he will keep energy help
The Chancellor has announced he will continue the support for energy bills, with £400 going to each household across the UK.
The average household will save £1,400 on their energy bills, Mr Kwarteng says.
He continued: "People will have seen the horrors of Putin’s illegal invasion of Ukraine. They will have heard reports that their already-expensive energy bills could reach as high as £6,500 next year.
"Mr Speaker, we were never going to let this happen. The Prime Minister has acted with great speed to announce one of the most significant interventions the British state has ever made. People need to know that help is coming. And help is indeed coming."
Energy plan will reduce inflation by five percent
Mr Kwarteng has said his plans will reduce inflation by five percent.
He says this Government is "on the side of the British people".
High taxation reduces investment, Kwarteng claims
Mr Kwarteng says we need a "new approach for a new era" and will deliver "tax reform" for higher wages and additional funding for public services.
Mr Kwarteng said that in the "medium term" he wants the economy to increase by 2.5 per cent annually.
He said that tax cuts will "turn the vicious cycle of stagnation into a virtuous cycle of growth".
Government consider the Bank of England's independence to be 'sacrosanct'
Kwarteng says the Bank of England is taking further steps to control inflation, acting again yesterday. He goes on:
This government considers the Bank of England’s independence to be sacrosanct.
Energy package will cost £60bn over next six months
Kwarteng says his growth plan is based on “reforming the supply side of the economy, maintaining a responsible approach to public finance and cutting taxes to boost growth”.
Government will legislate to remove planning restrictions 'that constrain growth'
There will be announcements in the coming weeks covering the planning system, business regulations, childcare, immigration, agricultural productivity and digital infrastructure.
Addressing planning, Kwarteng says the system is too slow.
The government will bring forward a bill “to unpick the complex patchwork of planning restrictions and EU derived laws that constrain our growth”.
Government will legislate to put new conditions on unions wanting to strike
Kwarteng says other countries have legislation to ensure minimum services continue during strikes. The government will do the same.
And it will legislate so that unions have to put pay offers to a vote
Confirms cap on bankers' bonuses to be lifted
Kwarteng says he wil reform the pension charge cap, so that pension funds can invest more easily in UK assets.
He confirms he will lift the cap on bankers’ bonuses.
Low-tax investment zones could be set up in almost 40 areas
Kwarteng confirms the government is setting up “new investment centres”
We will cut taxes for businesses in designated tax sites for 10 years. There will be accelerated tax reliefs for structures and buildings and 100% tax relief on qualifying investments in plants and machinery, on purchases of land and buildings for commercial or new residential developments.
There’ll be no stamp duty to pay whatsoever on newly occupied business premises. There’ll be no business rates to pay whatsoever and if a business hires a new employee in the tax site, then on the first £50,000 pounds they earn, the employer will pay no national insurance whatsoever.
He says the government is discussing creating these zones in nearly 40 places.
Planned increase in corporation tax cancelled
Kwarteng confirms the government will review the tax system.
Next year’s planned increase in corporation tax will be abandoned, he says.
Cutting stamp duty
Stamp Duty will only be charged on properties worth more than £250,000.
First time buyers will benefit from an increased barrier of £650,000, up from half a million pounds, on their first property purchase.
Personal taxes slashed - NI reduced
Mr Kwarteng said he wants to boost the incentive to work, and has cancelled the social care levy.
National Insurance rise, implemented by Rishi Sunak, has also been cancelled.
This will begin on November 6.
The Chancellor reassures that the funding for the NHS and social care will remain at current leveL
Income tax cut brought forward to 2023
Mr Kwarteng said income tax will be reduced to 19p in the pound from 2023.
It was originally scheduled for 2024.
He also told the House of Commons that he abolishing the additional rate of income tax which is currently set at 45 percent.
He said: "I’m not going to cut the additional rate of tax today, Mr Speaker. I’m going to abolish it altogether.
"From April 2023, we will have a single higher rate of income tax of 40 per cent. This will simplify the tax system and make Britain more competitive. It will reward enterprise and work. It will incentivise growth. It will benefit the whole economy and whole country.
Tax free shopping
Chancellor Kwasi Kwarteng said he was introducing VAT-free shopping for overseas visitors.
In response to the Chancellor's mini-budget, Shadow Chancellor Labour MP Rachel Reeves
Reeves asks what Chancellor has to hide
Responding in the Commons to the Chancellor's statement on the economy, Shadow Chancellor Rachel Reeves said: "The Chancellor has confirmed that the costs of the energy price cap will be funded by borrowing, leaving the eye-watering windfall profits of the energy giants untaxed.
"The oil and gas producers will be toasting the Chancellor in the boardrooms as we speak while working people are left to pick up the bill.
"Borrowing higher than it needs to be, just as interest rates rise. And yet the Chancellor refuses to allow independent economic forecasts to be published, which would show the impact of this borrowing on our public finances and growth, and on inflation.
"It is a budget without figures, a menu without prices. What has the Chancellor got to hide?"
Trickle down is an 'outdated ideology'
Ms Reeves has accused the government of replacing 'levelling up' with 'trickle down'.
The Shadow Chancellor told the Commons: 'What this plan adds up to is to keep corporation tax where it is today, and take national insurance contributions back to where they were in March. Some new plan.'
She added 'this is all based on an outdated ideology that says if we simply reward those who are already wealthy, the whole of society with benefit'.
Ms Reeves went on to reference Joe Biden saying 'As President Biden said this week, he is sick and tired of trickle-down economics. And he is right to be. It is discredited, it is inadequate and will not unleash the wave of investment that we need."
'12 years of economic failure' - Reeves attacks Kwarteng
Rachel Reeves said the new Chancellor's statement was an "admission of 12 years of economic failure" by the Tories.
The shadow chancellor added: "When the Prime Minister says she wants to break free from the past, what she really means to say is that she wants to break free from her own failed record, because where have the last 12 years left us?
"Lower growth, lower investment, lower productivity and today we learn that we have the lowest consumer confidence since records began.
"The only things that are going up are inflation, interest rates and banker bonuses."