Liz Truss orders urgent review into all tax cuts in mini-budget

Kwarteng needs to find £60bn of public spending cuts says IFS

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Liz Truss has ordered an urgent review of last month’s mini-budget amid continued market turmoil. The Prime Minister is thought to be looking at whether policy alterations are needed on policies announced just weeks ago in order to calm the City of London.

Chancellor Kwasi Kwarteng last week was forced to admit the Government would not go ahead with its plan to ditch the 45p top rate of tax due to anger from backbench MPs and the public.

But a full-scale reassessment of the entire fiscal statement is now understood to be taking place in order to see if further changes would help stabilise the economic situation.

Ms Truss said the measures in the mini-budget were necessary to get Britain’s economy booming again but is reported to be considering changes in order to prove the Conservatives remain the party that can be trusted with the economy.

Yesterday the Bank of England announced fresh emergency intervention to prevent “fire sales” of pension fund assets, amid the continuing market turmoil. Meanwhile, the pound slumped in value against the dollar.

A No10 official told The Independent that staff “have been told to go through the measures and the OBR’s working line by line”.

They added: “The turmoil in markets and the need to show fiscal prudence are being heeded. Everything is being looked at again, including tax cuts.

“The picture will change a lot if energy measures are means-tested carefully next winter and wholesale prices calm down a little.

“But that’s not enough on its own to balance the books as has been suggested, by getting debt down as a share of GDP.”

The mini-budget included measures to cut the basic rate of income tax to 19p in the pound, to scrap a planned increase in corporation tax, and to end a cap on bankers’ bonuses.

While the review is currently taking place, some of the policies announced in the mini-budget are already being voted on in the House of Commons.

Last night MPs passed a Bill to reverse April’s hike in national insurance contributions, as promised by Ms Truss in the Conservative leadership election.

Mr Kwarteng said: “Reversing the National Insurance rise is a promise delivered.

“It means an average saving of £330 a year for 28 million workers in the UK, and I’m delighted we will get a step closer to this today as the Bill passes through the Commons.”

Despite ministers looking at whether policies needed altering to help stabalise the markets, Business Secretary Jacob Rees-Mogg told the Daily Express yesterday that the public would realise the Government has “done its job for them” when energy bills are kept down this winter.

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He said: “As people discover they can pay their energy bills this winter, they will realise that the government has done its job for them.

“And that we’ve got away from the highest tax rates in 70 years.

“The IMF is now saying that the UK economy will grow.

“The governor of the Bank of England, did he say it was going to be armageddon?

“It seems that Liz Truss has avoided armageddon. That seems a pretty good thing to do in four weeks in office.”

A Government spokesperson said: “Through tax cuts and ambitious supply-side reforms, our growth plan will drive sustainable long-term growth, which will lead to more jobs, higher wages, and sustainable funding for public services.

“The Government is committed to fiscal responsibility.

“Building on the growth plan, the chancellor will set out the medium-term fiscal plan on October 31 alongside a full OBR forecast.”

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