Kwarteng, the Tory chancellor, signalled £45 billions of tax cuts, overwhelmingly for the very rich.
The cap on bankers’ bonuses will go—and the fattest of fat cats will again be cheering their puppet in Number 11 Downing Street.
Rupert Lee-Browne, chief executive of foreign exchange group Caxton, said that “with enticing tax cuts, removal of bonus caps, regulatory reform and huge spending plans, these measures will put a big smile on the face of the City”.
Kwarteng confirmed that corporation tax—paid by the top 10 percent of businesses—would not rise from 19p in the pound to 25p, as promised by his predecessor Rishi Sunak. It could have raised £17 billion a year from businesses to repair public finances.
From next April the present 45 percent top rate of tax—which applies to those grabbing over £150,000 a year—will be scrapped. So, the top rate will be 40 percent. This means mega earners pay the same rate as those on £50,000. This is a generous present to roughly the richest 1 percent at a time of national hardship.
The chancellor said he would also cut the basic rate of income tax by 1p in the pound to 19 percent in April 2023. That’s a year earlier than the government had previously promised and again it’s the rich who will gain most.
It will do nothing for 21 million adults surviving on less than £21,570 a year. But it’s a boon for business. The move will reduce tax for 920,000 businesses by nearly £10,000 on average next year.
Kwarteng said the government’s recent increase in national insurance contributions will be cancelled. The more you grab, the more you benefit from this. Someone earning £20,000 will get an additional £1.79 a week while a person on £100,000 will collect an extra £21 a week.
Analysis by the Resolution Foundation showed that half of the gains from personal tax cuts will go to the richest 5 percent. They will on average be £8,560 a year better off. In contrast, just 12 percent will go to the poorest half of households.
Meanwhile, 120,000 people on Universal Credit who earn less than the equivalent of 15 hours a week at National Living Wage rates will be forced to meet regularly with a “Work Coach”. And they’ll have to take active steps to increase their earnings.
If they don’t, the authorities will slash their meagre benefits. It’s an attempt to force them into low paid jobs.
As expected, there will be a cap on energy bills. But, at an average of £2,500 a year, it’s still double what people were paying a year ago.
Analysis from the End Fuel Poverty Coalition suggests that just under a quarter of all households will still fall into fuel poverty this year, even with this new energy price freeze and previously announced measures.