Chancellor Kwasi Kwarteng will unveil his emergency budget to MPs in the House of Commons this morning, as he puts into practice many of Prime Minister Liz Truss’s tax-cutting promises.
He is expected to promise a “new era for Britain” as he reveals a major package of around 30 measures to “turn the vicious cycle of stagnation into a virtuous cycle of growth”.
New tax cuts are anticipated, as well details of how the Government will fund the energy price cap for households and businesses.
Though it is not a full budget, the Institute for Fiscal Studies said it was likely to be the biggest tax giveaway for more than 30 years.
Mr Kwarteng will say that focusing on growth will deliver higher wages and raise revenue to fund public services, while allowing Britain to compete with other leading economies.
Yesterday he confirmed that the National Insurance rise would be reversed from 6 November and herei takes a look at what other measures could be announced today.
What time is Kwasi Kwarteng delivering his mini-budget?
The Chancellor will take to the Commons following a Cabinet meeting this morning.
His announcement to MPs is expected shortly after 9.30am.
Mr Kwarteng’s statement will last about 30 minutes as he outlines all of the new measures to tackle the cost of living crisis, soaring inflation and climbing interest rates.
What can we expect to be announced?
The Chancellor is set to axe the planned increase in corporation tax from 19 per cent to 25 per cent from April next year.
Ms Truss already confirmed that the rise would be scrapped during her visit to New York this week.
Ditching this tax alongside the national insurance rise will cost the Treasury £30bn a year.
Cut income tax
The Chancellor could make the bold step to cut the basic rate of income tax from 20p in the pound to 19p.
This move was first announced by Rishi Sunak in his Spring Statement this year, when he said the cut would be introduced before the end of the current Parliament in 2024.
During the Tory leadership campaign he upped this pledge and said he would take income tax from 20p to 16p by 2029.
Mr Kwarteng is not expected to go this far however, and is set to reduce the basic rate by 1p.
Scrap bankers’ bonuses
A cap on bankers’ bonuses is expected to be lifted as part of wider moves to deregulate the City.
At the moment bosses are not allowed to award more than twice an employee’s salary.
But Ms Truss and her Chancellor are looking at scrapping the cap as they want to enhance London’s position post-Brexit and they fear that a bonus cap will deter top executives from relocating from Singapore, New York and Zurich.
The Prime Minister has said the measure would “help Britain become more competitive, help Britain become more attractive, help more investment flow into our country”.
Mr Kwarteng is set to introduce further regulatory reforms in the City intended to unlock billions of pounds of investment by pension funds in infrastructure.
The IR35 tax regime could also be reviewed, something Ms Truss has said can force self-employed workers to overpay tax.
Mr Kwarteng is planning to cut stamp duty on house purchases, which is tipped to be his “rabbit out of the hat”.
Stamp duty was temporarily reduced during the Covid pandemic in a bid to restart the property market. The move cost the Treasury £6.4bn.
But experts have warned such a move would benefit the wealthy and risks raising inflation.
If the Chancellor didn’t want to go as far as announcing a stamp duty holiday, he could opt to change the banding system for payment, which has not been adjusted since 2006.
VAT could be slashed from 20 per cent to 15 per cent across the board.
A temporary reduction in the rate of VAT applied to hospitality and leisure may also be announced, as well as cutting VAT from energy bills.
Changes to Universal Credit
Thousands of part-time workers could have their benefits reduced if they do not take “active steps” to work more, as Mr Kwarteng is expected to shake-up the benefits system.
Currently, universal credit claimants working up to 12 hours a week at the National Living Wage risk having their benefits reduced if they do not take steps to increase their earnings and meet regularly with a work coach.
But the Chancellor could extend that to 15 hours a week.
It is understood that this change, expected to come in from January 2023 will affect about 120,000 more benefit claimants.
Mr Kwarteng has described the policy as a “win-win”, pitching it as a way to fill 1.2 million job vacancies across the country.
Special Investment Zones
Some 38 local council and mayoral areas could become new investment zones and benefit from more liberal planning rules and time-limited tax cuts.
The areas could be allowed to cut personal taxes, tear up affordable housing quotes and abandon enviornmental pledges to get firms building.
Areas under consideration include the West Midlands, Thames Estuary, Tees Valley, West Yorkshire and Norfolk.
New infrastructure projects
Mr Kwarteng is set to announce new laws to speed up major infrastructure projects across the UK.
This is expected to target fuel regeneration, roads and rail.
The new rules will aim to fast-track the planning and completion stages.