Politics

Kwasi Kwarteng hints at more tax cuts after bold mini budget

Kwasi Kwarteng grilled by Kuenssberg over tax cuts

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In a hint there could be more tax cuts to come, Mr Kwarteng told BBC’s Sunday With Laura Kuenssberg programme: “Looking at the Friday statement, we’ve actually put more money into people’s pockets. That’s why we’ve reversed the national insurance increase – which I think was not a good policy and we’ve reversed that – and also we’re bringing forward the cut in the basic rate and there’s more to come.

“We’ve only been here 19 days. I want to see, over the next year, people retain more of their income because I believe that it’s the British people that are going to drive this economy.”

When it was put to him that his mini-budget “favour overwhelmingly people at the very top”, he added: “They favour people right across the income scale.”

Pressed on whether he believes he has the public’s permission to slash taxes and run up Government borrowing, the Chancellor said: “I think it’s very clear to me that people don’t want to see the tax burden going up indefinitely.

“When you have a tax system, the tax burden today, which is higher than at any time in the last 70 years, people begin to worry and business begins to worry and says ‘what are the incentives to activity in this economy? How do we invest and grow? Why should I set up a business or why should I employ people? Why should I even go to work if I’m being taxed to a very, very high degree’.

“And I wanted to change that narrative, I wanted to change that direction”.

He added: “We have a responsibility in Government to protect everybody and to make Britain the best it can be and I think economic growth is absolutely essential to that”.

Mr Kwarteng suggested the public will pass judgment on his programme at a “general election in the next two years.”

He also said he would not put a limit on borrowing if there is another “exogenous event” in the future.

He said: “All I would say on borrowing is that we’ve managed to respond to what they call two exogenous shocks, two things that were not in our control and were of unprecedented scale, and that was absolutely the right thing to do.

“Obviously, I will be setting out plans for the medium-term fiscal plan, as we’re calling it.”

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He added: “What I’m not going to do Laura is to say that if there is an exogenous extreme event, I can’t possibly say that we won’t borrow to deal with that. And that’s what we’ve done. That’s why we have borrowed in the way we have.”

Defending his decision to impose tax cuts during his mini-budget, he argued: “In terms of our approach, there was no way that we were going to get more growth by simply increasing taxes and taking more of people’s money.

“And that was the response that the Prime Minister and I debated. We talked about it and we thought we’ve got to change tack.”

Questioned about the rising levels of inflation, he added: “I’m confident that the Bank (of England) is dealing with that, but also what perplexes me was the fact that you don’t deal with people’s rising cost of living by taking more of their money in tax.

“This was a totally perverse argument. No other G7 country is lifting up taxes while dealing with the cost of living. It doesn’t make any sense.”

Labour leader Sir Keir Starmer hit out at the Government’s “wrongheaded” economic policies as he pledged to reverse the income tax cut for people earning more than £150,000.

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The opposition leader, who said his party now had a belief it would win the next general election, said the mini-budget announcements by Chancellor Kwasi Kwarteng had set clear political dividing lines.

He said the Tory policy was for the “rich to get richer” while offering little to ordinary workers but said Labour would reinstate the 45p additional rate of income tax for top earners which Mr Kwarteng abolished from April next year.

But Sir Keir said he backed Mr Kwarteng’s promise to cut the basic rate of income tax from 20p to 19p.

He said people were facing a “very difficult winter” with supermarket customers “looking at the price of food and having to put it back down again” because of soaring costs.

“It’s on the back of 12 years of Tory failure. We’ve had an economy that hasn’t really grown very much for 12 years, we’ve had wages which haven’t really moved for 12 years, because they’ve taken the wrong decisions, they haven’t planned for the future.

“And now we’ve got this decision on Friday to take a very risky approach to the future, driven by this ideology, this argument – wrongheaded argument in my view – that if you simply allow the rich to get richer, somehow that money will trickle down into the pockets of all the rest of us.”

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