Critics are rounding on the government's new tax measures - warning they favour the wealthy, ITV News reports
A thinktank's analysis has found 'only the very richest households' will benefit from the 'mini-budget' tax cuts announced by the Truss government.
The Resolution Foundation said its number-crunching had found Chancellor Kwasi Kwarteng’s package will do nothing to stop more than two million people falling below the poverty line.
It comes as Labour accuses Prime Minister Liz Truss and Mr Kwarteng of gambling with people’s finances in “casino economics” and said their “trickle-down” approach will leave the next generation worse off.
Using more than £70 billion of increased borrowing, Mr Kwarteng on Friday unveiled the biggest programme of tax cuts for 50 years, including abolishing the top rate of income tax for the highest earners.
Analysis of the mini-budget by Resolution Foundation said “only the very richest households in Britain” will see their incomes grow as a result of the tax cuts.
The wealthiest 5% will see their incomes grow by 2% next year (2023/24), while the other 95% of the population will get poorer as the cost of living crisis continues.
The Institute of Fiscal Studies (IFS) said only those with incomes of over £155,000 will be net beneficiaries of tax policies announced by the Conservatives over the current Parliament, with the “vast majority of income tax payers paying more tax”.
Chief Secretary to the Treasury Chris Philp insisted slashing taxes for high and low earners will drive growth.
He told ITV News: "It cuts tax for everybody on all income levels, rich and poor alike. It cuts national insurance, it cuts income tax, and it makes sure businesses can pay competitive rates of tax." But Labour said the measures were presented as though the Conservatives had just come into power.
Shadow justice secretary Steve Reed told ITV News: "Liz Truss was a member of the Cabinet for 10 years.
"She was involved in supporting every one of those failed growth strategies, she voted for every one of the tax rises that she now tells us were so damaging.
"So for the party that got it so badly wrong - I have no confidence that they are suddenly going to get it right."
Labour leader Sir Keir Starmer, who is expected to seek to capitalise on the unpopularity of the Government’s new measures at his party’s annual conference, tweeted: “Tory casino economics is gambling the mortgages and finances of every family in the country.”
His comments echoed Mr Kwarteng’s, who told reporters on Friday: “It’s not a gamble.
“What is a gamble is thinking that you can keep raising taxes and getting prosperity, which was clearly not working.”
The Resolution Foundation said Mr Kwarteng’s measures will involve an extra £411 billion of borrowing over the next five years, while the IFS said he is “betting the house” by putting Government debt on an “unsustainable rising path”.
The package was announced a day after the Bank of England warned the UK may already be in a recession and lifted interest rates to 2.25%.
As part of tax cuts costing up to £45 billion annually, Mr Kwarteng also slashed stamp duty for homebuyers and brought forward a cut to the basic rate of income tax, to 19p in the pound, a year early, to April.
He confirmed plans to axe the cap on bankers’ bonuses, added restrictions to the welfare system, reversed the rise in national insurance and scrapped a planned rise in corporation tax.
There has also been criticism from within the Conservative camp.
Conservative former cabinet minister Julian Smith said: “This huge tax cut for the very rich at a time of national crisis and real fear and anxiety amongst low-income workers and citizens is wrong.”
Mr Kwarteng avoided the scrutiny of the independent financial analysts by describing the package as a “fiscal event” rather than a full budget.
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