Stagnation cycle ‘must be broken’
control as a result of the Government’s new energy price cap;
▪ Business Secretary Jacob Rees-Mogg announced that the ban on fracking in England had been lifted;
▪ The Chancellor confirmed the national insurance hike will be reversed in November.
▪ Universal Credit claimants could have their benefits cut unless they take active steps to work at least 15 hours a week at the national living wage.
Mr Kwarteng is expected to tell MPs today: ‘Growth is not as high as it needs to be, which has made it harder to pay for public services, requiring taxes to rise.
‘This cycle of stagnation has led to the tax burden being forecast to reach the highest levels since the late 1940s. We are determined to break that cycle. We need a new approach for a new era focused on growth.
‘That is how we will deliver higher wages, greater opportunities and sufficient revenue to fund our public services, now and into the future. That is how we will compete successfully with dynamic economies around the world. That is how we will turn the vicious cycle of stagnation into a virtuous cycle of growth. We will be bold and unashamed in pursuing growth – even where that means taking difficult decisions. The work of delivery begins today.’
Today’s fiscal statement had been billed as a ‘mini-budget’, but yesterday the Institute for Fiscal Studies said it would amount to the biggest tax giveaway in three decades.
Then- chancellor Lord Lawson delighted Conservative MPs in 1988 when he used his budget to slash income tax, cutting the basic rate by 2p in the pound and scrapping all higher rates above 40 per cent.
IFS director Paul Johnson said: ‘This will actually, we think, be the biggest tax- cutting fiscal event since Nigel Lawson’s budget of 1988. So it may not be a budget but in terms of tax cuts it is going to be bigger than any budget for more than 30 years.’
Mr Johnson said that with £30billion of tax cuts, the deficit could hit around £100billion by 2025, which would ‘put debt on an unsustainable path’.
A big increase in economic growth would make things easier but that was not guaranteed, he added.
The IFS also warned that most households will be worse off this year despite a massive package of state support to deal with the cost
of living crisis. It reckons that a median earner will be £500 worse off in real terms than they were last year – a cut of around 3 per cent in their income. Higher earners will be £1,000 worse off.
‘I am afraid that the energy price shock has made us poorer and we will be worse off,’ said Mr Johnson. ‘The Government can spread the pain over time and between people but in the end it is not going to be able to magic it away.’
The Chancellor will also announce that officials are in talks with 38 council and mayoral areas to set
up ‘investment zones’. Each zone will offer tax cuts for businesses to help them create jobs and improve productivity.
The areas will have less strict planning rules and there will be reforms to environmental regulations to make it easier to build more houses and commercial property.
Mr Kwarteng will also announce legislation to accelerate the delivery of around 100 major infrastructure projects, including transport, energy and digital schemes.
This could include scrapping rules protecting rare and endangered species. The Chancellor will also use his ‘fiscal event’ to set out details of how the state will fund an energy price cap announced by the Prime Minister earlier this month.
Downing Street insisted that Liz Truss remained committed to the
2019 Tory election manifesto, despite making a sharp break with the economic policies of Boris Johnson’s administration.
She told business chiefs in New York this week she wanted ‘lower, simpler taxes in the UK to incentivise investment, to get more businesses going in the UK’.
She is said to believe that cutting stamp duty – paid when buying a property worth more than £125,000 – would drive growth by encouraging more people to move, as well as helping first-time buyers.
The PM said on Wednesday: ‘We won’t be raising corporation tax, as was planned. We’ll be reversing the national insurance rises which took place earlier this year. And the Chancellor will be announcing various other simplification measures.’
‘Making it easier to build houses’
WITH wearisome predictability, GPs are grumbling about Therese Coffey’s plan to cut waiting times for appointments.
The Health Secretary is concerned delays for consultations deter patients from seeking a doctor’s advice – with potentially serious health implications.
But the militant medical unions say this sensible measure will be ‘demoralising’.
Yes, being a doctor can be stressful. And the Government must train more practitioners to prevent the service collapsing. But it costs the taxpayer around £230,000 a year to train a GP, and many quickly go part-time. Wouldn’t primary care be healthier if they were obliged to work full time for a meaningful stint?