Mini-budget condemned as 'morally bankrupt' over tax cuts for wealthy
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The financial package was focused entirely on making Britain more globally competitive, said the Chancellor, and was geared to achieve the economic growth which Prime Minister Liz Truss made her top priority in the Tory leadership campaign.
The measures Mr Kwarteng announced included:
– Corporation tax to remain at 19 per cent rather than rise to 25p as planned
– Reversal of 1.25 per cent rise in National Insurance intended to fund the NHS and social care
– Cap on bankers’ bonuses scrapped
– Basic rate of income tax to be cut to 19p in the pound from April 2023 (not in Scotland)
– Abolition of top rate of income tax of 45p in the pound paid by those on salaries over £150,000 (not in Scotland)
– Stamp duty cut, so nothing paid on first £250,000 of property’s value (not in Scotland)
– VAT-free shopping for overseas visitors
– People on Universal Benefit working less than 15 hours face benefit cut unless they increase their hours
Income tax in Scotland is set by the Scottish Government, so the basic rate here will remain at 21p in the pound and the top rate 46p in the pound.
First Minister Nicola Sturgeon responded to the budget on Twitter: “The super wealthy laughing all the way to the actual bank (tho I suspect many of them will also be appalled by the moral bankruptcy of the Tories) while increasing numbers of the rest relying on food banks - all thanks to the incompetence and recklessness of this failed UK gov.
“A UK gov ‘budget’ that benefits wealthiest over poor/middle income earners, tanks the £, pushes up the cost of (v substantial) borrowing, and is castigated as reckless.
And yet Tories (& right wing commentators) will demand that @scotgov blindly follows suit. Mmm….”
And Scottish Labour leader Anas Sarwar said: “This mini budget demonstrates whose side the Tories are on. It is economically illiterate and morally bankrupt.“They have lifted the cap on bankers bonuses, given a tax cut to those at the very top, and delivered a windfall instead of a windfall tax for the energy giants making record profits – all while letting energy prices almost double and working people struggle to make ends meet. After 12 years of economic failure and bribes for billionaires, we deserve better.”
The UK Government’s Scotland Office said reversing the 1.25 per cent rise in National Insurance contributions would save 920,000 UK businesses almost £10,000 on average next year and 2.3 million workers in Scotland an average of £285 a year.
And it said over the three-year Spending Review 2021 period, the Scottish Government was expected to receive more than £460m additional funding as a result of the new income tax cuts and a further £170m as a result of the changes to stamp duty.
Scottish Secretary Alister Jack said: “The Chancellor has set out an ambitious package of measures which will cut taxes and drive growth right across the UK. Our ‘Plan for Growth’ will support households and businesses in Scotland, while driving economic growth to deliver jobs, investment and prosperity. The UK Government is delivering for the people of Scotland when it really matters.”
But John Dickie, director of Child Poverty Action Group in Scotland, said it was children in poverty who would pay the price for the Chancellor’s decision to prioritise tax cuts that mainly benefit the better-off. He said: “It is our poorest families who are struggling most in the face of the cost of living crisis.”
And he added: “In the long shadow cast by the Chancellor’s statement it is critical that the Scottish government continues to do the right thing and prioritises tackling child poverty. That means using the imminent emergency Scottish budget review to provide more immediate support for hard-up families.”
The Scottish Tourism Alliance welcomed the move to introduce tax free shopping for overseas visitors, but said the Chancellor’s measures did not go anywhere near far enough in providing solutions to the cost of living and “cost of doing business” crisis.
STA chief executive Marc Crothall said: “Business rates relief and the lowering of VAT, which was expected and hoped for by many across the tourism and hospitality sectors, would have provided an immediate benefit to struggling businesses within the sector and vital supply chain, as we head into what will be our most challenging winter yet.”
The Scottish Retail Consortium welcomed the reversal of the rise in National Insurance contributions and also tax free shopping for international visitors. And SRC director David Lonsdale pointed to the income tax cuts south of the border, saying: “Scottish Ministers should ensure workers on low or modest earnings here in Scotland benefit similarly to boost household incomes and encourage discretionary spending.”
Midlothian SNP MP Owen Thompson said the budget was a kick in the teeth for all those struggling to make ends meet in the cost of living crisis. “It is beyond belief that this Conservative government has chosen to bring back obscene, unlimited bonuses for bankers, while forcing the poorest paid to work more. This is a morally bankrupt government, punishing the poor to pay the rich.”
And Peter Kelly, director of the Poverty Alliance, said the budget had been an opportunity to protect people from being pulled deeper into poverty, for example by boosting Universal Credit. “Instead, Kwasi Kwarteng's statement embodied the economic policies that helped create the social and economic injustice that exists today. The Chancellor’s statement, with its tax cut for the wealthiest, makes clear where his priorities lie.
"His priorities are the wrong ones, and fail to reflect the values of justice and compassion that are at the heart of our society. This mini budget will do nothing for the people who need help the most."