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Mini-budget latest live: Kwasi Kwarteng is set to announce tax cuts for millionsMEERI News

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wasi Kwarteng has unveiled a mini-budget that delivers billions of pounds in tax cuts – including a surprise move to scrap the 45% top rate of income tax paid by the UK’s richest.

The chancellor announced sweeping measures intended to revive the economy in an eagerly awaited “fiscal event” on Friday morning.

The government is calling it a “growth plan” at a time when the UK is facing a cost of living crisis, recession, rising inflation and rising interest rates.

The Chancellor told MPs that a planned rise in corporation tax would be scrapped as he announced that the cap on banker bonuses would be scrapped.

He also announced that the basic rate of income tax would be reduced to 19p in the pound from April 2023. And he said the 45% top rate of income tax would be “abolished”.

Mr Kwarteng said his economic vision would “turn the vicious cycle of stagnation into a virtuous cycle of growth”.

But shadow chancellor Rachel Reeves said the strategy amounted to “an admission of 12 years of economic failure” under successive Conservative governments.

The Labor MP described the Prime Minister and Mr Kwarteng as “two desperate gamblers in a casino chasing a losing race”.

Live update

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Nursing union says government has ‘wrong priorities’, calls for strike action

The Royal College of Nursing described the mini-budget as giving “billions to the bankers and nothing to the nurses”.

General secretary and chief executive Pat Klein said it was a clear sign the government had “the wrong priorities”.

“Nursing will be disappointed by the decision to prioritize good bankers over NHS and social care staff, some of whom are using food banks and live on a financial knife-edge,” he said.

“Ministers have benefited from the good will of nursing staff for too long and we are urging our members to vote in favor of strike action when our ballots open on October 6.”

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Government borrowing will rise to £72bn

Chancellor Kwasi Kwarteng’s mini-budget will result in government borrowing rising by £72 billion, according to Treasury documents.

The Debt Management Office’s net financing requirement has been increased to £234.1 billion from £161.7 billion in April.

This will be funded by additional gilt sales of £62.4 billion and net Treasury bill sales of £10 billion.

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Kwarteng: I am happy to join the calls for fuel duty reduction

Kwasi Kwarteng said he was happy to “engage” with the call for fuel duty cuts as MPs sought a steer from the chancellor on a wide range of tax and spending questions.

After his first significant set of fiscal announcements in the Commons as chancellor, Conservative backbenchers tried to test Mr Kwarteng’s instincts and draw his attention to a range of policy issues, including aid spending, business rates, and Sunday opening hours.

Conservative MP Robert Halfon, a long-time campaigner for fuel duty cuts, said petrol and diesel prices were at “historic highs”.

He asked the chancellor if he could “please do everything he can to cut fuel duty” in the next budget.

Mr Kwarteng replied: “I would be very happy to engage my right honorable friend on that.”

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Cutting the top rate of income tax would cost £2bn

Cutting the top rate of income tax from 45% to 40% would cost the Treasury £2bn, according to its figures.

This means that all annual income above £50,270 will be taxed at 40%, the current top rate of income tax.

An estimated 629,000 higher-rate taxpayers are set to benefit from the cut.

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Business groups largely welcome the mini-budget tax cuts

The CBI, which represents British business, has largely welcomed the plans announced by the Chancellor, labeling them “a turning point for our economy”.

Director-General of the CBI, Tony Danker, said: “Like Covid, the energy crisis means the government has to spend big to protect people and businesses. This means we have no choice but to turn to development to afford it.

“Today marks one of the new visions of UK growth. We must now use this opportunity to make every corner of the UK count and bring growth. Fifteen years of anemic growth cannot be repeated.

“Taking action to get Britain’s economy moving again by starting construction on transport and green infrastructure projects shows immediate delivery. Planning reform is long overdue.

“A simpler, smarter approach to tax can pay dividends and firms will be keen to make the most of the investment incentives on offer.

“It’s not perfect – it’s just the start – but there’s a lot of business to work with. The chancellor hinted at further proposals coming this autumn and they will be crucial to sustaining the growth momentum.”

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Poverty charity says government has ‘no grasp of economic reality’

Rebecca McDonald, chief economist at the Joseph Rowntree Foundation, said the chancellor’s mini-budget proved the government had “no understanding of the economic reality facing millions of people across the UK”.

Ms Macdonald said: “This is a budget which has deliberately ignored families struggling to make ends meet and instead targeted the wealthiest. This leaves the lowest-income people out in the cold without any extra help to get them through the winter.

“Low-income households cannot afford to wait for the promised benefits of economic growth to fall into their pockets. An energy price cap fixes bills at a level that is already unaffordable for many people and will never be enough to solve the problem for the lowest incomes.

“With food prices rising faster than inflation, and no action today, it will be a bitter winter ahead.”

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Sturgeon: Rich ‘will laugh to the bank’

Reacting to the chancellor’s tax cuts, Scotland’s first minister, Nicola Sturgeon, said it would leave the rich “laughing all the way to the real bank”.

Mr Kwarteng announced an unexpected cut in the top rate of income tax from 45% to 40%, although he noted it had been at this level for many years under the previous Labor government.

Ms Sturgeon tweeted: “The very rich are laughing at the real bank (although I suspect many of them will also be horrified by the moral bankruptcy of the Tories) while the rest are increasingly dependent on food banks – of all Thanks to the incompetence and negligence of this failed UK government”.

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The Chancellor fails to say when foreign aid spending will return to 0.7% of GDP

Chancellor Tory failed to say exactly when UK aid spending would return to 0.7% after being pressed by former international development secretary Andrew Mitchell.

Mr Mitchell told the Commons: “Can I remind him of the importance of the UK’s investment in tackling international problems, whether it is pandemics, illegal migration or climate change?

“It’s about British expertise but it’s also about British money. Can he confirm to the House that we are on track to restore the manifesto pledge to return to 0.7% in 2024?”

Mr Kwarteng replied: “We always look at our manifesto commitments and given our guidance in that, I hope we can come down to 0.7% as is practical and public finances allow.”

The government has cut foreign aid from 0.7% of GDP to 0.5% in 2021 to free up more cash for domestic spending during Covid.

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The pound sank to a new 37-year low

The pound sank to a fresh 37-year low as the Chancellor unveiled billions of pounds of tax cuts and spending on Wednesday morning.

The FTSE 100 fell to its lowest level in two months.

Sterling fell 0.89% to US$1.115 as Kwasi Kwarteng addressed Parliament at 9.30am on Friday.

It has since stabilized around $1.119, but remains below the 37-year low hit earlier this week as concerns about rising interest rates hit the currency.

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Tax changes ‘barking up the wrong tree’, say children’s charities

A children’s charity has said changes to the tax system at the moment are “barking up the wrong tree” and failing to meet the needs of those on the lowest incomes.

Mark Russell, chief executive of The Children’s Society charity, said: “We need to see more direct support for families struggling with the cost of living crisis.”

“What is conspicuously absent from today’s announcement is any targeted support for the families most affected.”

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