Sir Keir Starmer quizzed her on the mini budget and mortgage rates before asking about her pledge, during the Tory leadership campaign, that she would not reduce public spending. Responding, the Prime Minister said she “absolutely” would not
The markets were plunged into turmoil again as Bank of England governor Andrew Bailey warned there could be no further extension of the emergency market support beyond the end of the week.
“My message to the (pension) funds involved – you’ve got three days left now. You have got to get this done,” he said. “Part of the essence of a financial stability intervention is that it is clearly temporary.”
Following Mr Bailey’s remarks, sterling fell more than a cent against the dollar to its lowest rate since September 29. The pound was lower against both the dollar and euro on Wednesday morning amid continued unease among financial traders.
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UK politics live - Bank of England to end emergency support within days
The Labour Party are considering scrapping the House of Lords, according a new leaked report.
In material leaked to The Guardian, Labour are considering replacing the House of Lords with an upper house of nations and regions, as well as handing down more powers to local regions and devolved nations.
The report comes as a result of a constitutional review conducted by former Prime Minister Gordon Brown.
A Labour spokesperson said of the leaked document: “This refers to one of several early drafts. The commission has yet to take a view on all these issues.”
The Labour Party Conference is set to kick off on 25 September in Liverpool, however it is believed that the leaked report was not due to be announced at the event.
Kwasi Kwarteng will today pledge to “turn the vicious cycle of stagnation into a virtuous cycle of growth” as he sets out the new government’s approach to the UK economy, my colleague Claire Schofield reports.
The Chancellor is set to announce tens of billions of pounds of increased spending and tax cuts in his mini-budget at around 9.30am on Friday (23 September).
The government is dubbing the announcement a “growth plan” of some 30 measures which is expected to include details of how it will fund the energy price cap for households and businesses, and put into practice the Prime Minister’s tax-slashing promises.
Mr Kwarteng is expected to tell the House of Commons: “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.”
He will say that this will deliver enough revenue to fund public services, and allow Britain to compete with other leading economies.
The Chancellor already confirmed ahead of his mini-budget that the national insurance hike introduced by Boris Johnson’s government to pay for social care and tackling the NHS backlog will be reversed.
He is also set to axe the planned increase in corporation tax from 19% to 25%, and scrap the cap on bankers’ bonuses as part of wider City deregulation.
Mr Kwarteng will also reportedly cut stamp duty in an attempt to drive growth, and proposals to fast-track a scheduled 1p cut to income tax and to slash VAT from 20% to 15% across the board are reportedly also being considered.
The government is in talks with local authorities in the West Midlands, Tees Valley, Somerset and other regions to establish new investment zones – areas with lower taxation and planning rules, the Chancellor is to announce.
He also wants new measures to speed up around 100 major infrastructure projects, including new roads, railways and energy projects, by watering down environmental assessments and other regulations.
In a shake-up of the welfare system, Mr Kwarteng could reportedly announce that 120,000 Universal Credit claimants will have to take active steps to find work or lose benefits.
Chancellor Kwasi Kwarteng began his mini-budget announcement by insisting that “help is coming” for people with their energy bills.
He said the government’s energy price guarantee will limit the unit price that consumers pay for electricity and gas, and will bring households an annual saving of £1,000.
“For the next two years, the typical annual household bill will be £2,500. For a typical household, that is a saving of at least £1,000 a year, based on current prices”, he said.
“We are continuing our existing plans to give all households £400 off bills this winter. So taken together, we are cutting everyone’s energy bills by an expected £1,400 this year.”
Mr Kwarteng said the Energy Bill Relief Scheme will reduce wholesale gas and electricity prices for all UK businesses, charities and the public sector, including schools and hospitals.
He added that “energy prices are currently extremely volatile, erratically rising and falling every hour”.
He said: “This creates real risks to energy firms who are otherwise viable businesses. Those firms help supply the essential energy needed by households and businesses. So, to support them, we are announcing the Energy Markets Financing Scheme.
“Delivered with the Bank of England, this scheme will provide a 100% guarantee for commercial banks to offer emergency liquidity to energy firms.”
Chancellor Kwarteng said economic growth in the UK is “not as high as it should be”, noting this has “made it harder to pay for public services” and in turn led to higher taxes.
He said: “In turn, higher taxes on capital and labour have lowered returns on investment and work, reducing economic incentives and hampering growth still further. This cycle has led to the tax burden being forecast to reach the highest levels since the late 1940s – before even Her Late Majesty acceded to the throne.”
Mr Kwarteng said the government wants to “break that cycle” and the UK needs a “new approach for a new era”.
He added: “Our aim, over the medium term, is to reach a trend rate of growth of 2.5%. And our plan is to expand the supply side of the economy through tax incentives and reform.”
He said this will deliver higher wages, greater opportunities and fund public services.
The government will legislate to require trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down, the Chancellor has announced.
The government will lift the cap on bankers’ bonuses, Kwasi Kwarteng has told the Commons.
The cap was introduced across the EU in 2014 following the global financial crisis.
Under the current rules, a banker’s bonus cannot be higher than twice their annual salary, unless shareholders agree.
The 45% higher rate of income tax will be “abolished”, the Chancellor has announced.
Kwasi Kwarteng confirmed he is cutting the basic rate of income tax to 19p in the pound next year.
He told MPs: “I’m not going to cut the additional rate of tax today. I’m going to abolish it altogether.
“From April 2023 we will have a single higher rate of income tax of 40%. This will simplify the tax system and make Britain more competitive. It will reward enterprise and work. It will incentivise growth. It will benefit the whole economy and the whole country.
“And, Mr Speaker, after all, this only returns us to the same top rate we had for 20 years – including the entire time the Opposition was last in power – bar one month.”
Mr Kwarteng added: “I can announce today that we will cut the basic rate of income tax to 19p in April 2023 – one year early.
“That means a tax cut for over 31 million people in just a few months’ time. This means we will have one of the most competitive and pro-growth income tax systems in the world.”
The Chancellor confirmed a cut to the stamp duty tax in England and Northern Ireland.
The cut raises the threshold of how much a property has to cost before stamp duty is paid to £250,000.
He told the Commons: “Home ownership is the most common route for people to own an asset, giving them a stake in the success of our economy and society.
“So, to support growth, increase confidence and help families aspiring to own their own home, I can announce that we are cutting stamp duty. In the current system, there is no stamp duty to pay on the first £125,000 of a property’s value. We are doubling that – to £250,000.”
Mr Kwarteng also said the stamp duty threshold for first-time buyers would be increased from £300,000 to £425,000.
He added: “We’re going to increase the value of the property on which first-time buyers can claim relief, from £500,000 to £625,000.
“The steps we’ve taken today mean 200,000 more people will be taken out of paying stamp duty altogether. This is a permanent cut to stamp duty, effective from today.”
Kwasi Karteng has announced VAT-free shopping for overseas visitors will be introduced as part of the UK’s drive to “modernise”.
He also confirmed an 18-month transitional measure for wine duty and said the government will extend draught relief to cover smaller kegs of 20 litres and above, “to help smaller breweries”.
The planned increases in the duty rates for beer, for cider, for wine, and for spirits will all be cancelled, he adds.
He told the Commons: “Our drive to modernise also extends to alcohol duties. I have listened to industry concerns about the ongoing reforms. I will therefore introduce an 18-month transitional measure for wine duty.
“I will also extend draught relief to cover smaller kegs of 20 litres and above, to help smaller breweries. And, at this difficult time, we are not going to let alcohol duty rates rise in line with RPI.
“So I can announce that the planned increases in the duty rates for beer, for cider, for wine, and for spirits will all be cancelled.”