Labour MS slams Liz Truss's tax cut plans which she admits will benefit richest most

A Labour MS has hit out at the prime minister's plans to cut taxes, saying the move won't help people struggling with the cost of living.

Liz Truss has said she is willing to be unpopular in order to bring in measures she believes will grow the economy, as she admitted her tax cuts will disproportionately benefit the rich.

Speaking on Tuesday's Sharp End on ITV Wales, Huw Irranca Davies said cutting taxes for the wealthiest - often referred to as "trickle down economics" - won't work.

Mr Irranca Davies said: "It is in effect raising the shackles on the very well paid, on corporations and bonuses and so on, well that's the wrong way to do it. And if it's benefitting higher rate tax payers but it's actually landed on the shoulders of the poorest paid, that's the wrong way to do it."

'It's never worked and it won't work this time'

The Labour MS continued: "That old gospel of saying we'll just take the shackles off and then trickle down economics, Reagan style economics, that everybody will benefit. But the truth is, nobody ever does. It's never worked and it won't work this time."

Ms Truss has rejected claims of unfairness as she bet on growth trickling down to the rest of society.

Liz Truss speaks to journalists at the Empire State Building in New York. Credit: PA

“I don’t accept this argument that cutting taxes is somehow unfair,” she told Sky News.

“What we know is people on higher incomes generally pay more tax so when you reduce taxes there is often a disproportionate benefit because those people are paying more taxes in the first place."

Mr Irranca Davies said he was also concerned about people having to foot high energy bills for years to come and criticised the UK Government for not portioning more of the burden on energy companies.

Earlier this month, Liz Truss announced that the price of energy would be capped at around £2,500 for the next two years - rather than the previous £3,549 increase in October.

Energy costs for businesses will also be cut as part of a huge relief package for six months from October.

Mr Irranca Davies said: "If we see the energy bills being balanced on future payers of those bills, well that's not progressive whatsoever.

"We may be helping people out for one winter or 18 months and then saying by the way you've got ten years to pay it back. Not the energy companies, not a windfall tax, but you."

The Ogmore MS's comments come after US President Joe Biden appeared to take a swipe at Liz Truss as he publicly hit out at “trickle-down economics”.

Mr Biden said he was “sick and tired” of the theory that cutting taxes for businesses and the wealthy will see the benefits “trickle down” into the pockets of poorer workers.

His comments came after his British counterpart reiterated to broadcasters in New York that tax cuts were key to spurring economic growth across the UK.

The Chancellor, Kwasi Kwarteng, is expected to unveil a package of tax cuts as part of a mini budget on Friday 23 September.

On Wednesday morning, the UK Government announced that energy costs for all UK businesses, charities and public sector bodies will be cut as part of a huge relief package.

The new Energy Bill Relief Scheme will provide a discount to all firms for six months from the start of October.

The Chancellor, Kwasi Kwarteng, is holding a mini budget on Friday. Credit: PA Images

Wholesale energy costs will be capped at "less than half" for all non-domestic customers under the scheme, in a bid to protect them from soaring prices so they are "able to get through the winter".

In response to Mr Irranca Davies's comments, Laura Ann-Jones, the Conservative MS for South Wales East, told Sharp End that people are starting to get the help they need.

"We are already seeing the help come, with money going into people's bank accounts today for the hard working people in Wales who need that support.

"This government has got a growth plan, it has an economic plan and now we're going to see that.

"She's (Liz Truss) hit the ground running, she's already delivering for the people of Wales, she's cutting the taxes, putting the money back, she's encouraging businesses to invest in Britain and that will have an impact and stimulate the economy.

"People are having those tax cuts when they need a break, we're in a cost of living crisis, this is a unique time, we need to do things and I think her plan is good and I look to Friday to see what's coming next.

See more on this story on Tuesday night's Sharp End here.