UK

‘Helping the rich’: mini-budget brings fear and anger to PM’s home patch

Residents in the Leeds suburb of Roundhay, where Liz Truss went to school, express their views

Liz Truss leaves Downing Street as the chancellor prepares to deliver the government’s mini-budget. Photograph: Aaron Chown/PA

Robyn Vinter

THE GUARDIAN
@robynvinter

Fri 23 Sep 2022 

On the high street in the leafy suburb of Roundhay, where Liz Truss went to school and her parents still live, there is a sense of frustration, and even anger, at the measures announced in Friday’s mini-budget.

Catherine Brittain, a childminder, was forced to negotiate with her energy provider, which upped her bills from £109 a month to £350. She was able to agree to pay £200 until after Christmas.

She said: “I can’t afford to pay more. I’m worried about the cost of living and at the moment I haven’t passed that on to parents but I’m not sure how much longer I can keep it up.”

Worried about the cost of living: Catherine Brittain, 

a childminder in Roundhay, Leeds. 

Photograph: Richard Saker/The Guardian

She needs to provide a warm home for the children she cares for, as well as meals, and it comes at a cost.

“I’m not a charity. I could charge more but I charge what I think is fair.”

Brittain is worried about the ability of Truss – “a vile human being” – and her cabinet to prevent a huge economic crisis and is sceptical of the chancellor Kwasi Kwarteng’s tax reforms.

Kwarteng revealed a surprise cut to income tax, scrapping the additional rate, which saw high earners paying 45% on any income over £150,000. He also brought forward a planned 1% cut in the basic rate of income tax from 2024 to next year.

“They’re just helping the rich and maybe a few crumbs eventually dribble down to us.

“We need a windfall tax, otherwise we’re just going to pass on these debts to our children.”

Last month, Sade Scales’s monthly direct debit for her gas and electricity rose from £65 to £89 overnight. It might not seem like much compared to what some people are paying but working as a part-time carer in Leeds while looking after a disabled child, any further rises will hit her hard.

“I’ve got some credit on my energy account but I’ve had to cut back,” she said. “I think I’m going to need extra money this winter since it’s just going to get worse.”

She was frustrated that other countries, such as France, had been largely insulated from energy price rises by government policies. In January, the French government capped price rises from the state-owned energy company EDF at 4%. It also made a one-off payment of €100 (£84) last year to the poorest 5.8m households.

Scales added: “It’s not our fault. It’s like, why are you taking it out on us? There has to be a cut-off point.”

Her friend Sandra Smith, a parent and carer, agreed.

‘It’s not our fault,’ says Sade Scales, left. She and her 

friend Santra Smith, right, are carers in Leeds.

 Photograph: Richard Saker/The Guardian

“A lot of my single friends are not doing well. It’s a struggle, they’re living month to month. I haven’t got much faith that anything is going to get better,” she said.

Smith was also frustrated to hear about plans to force universal credit claimants into working more hours, as a former recipient who knows how difficult it is to survive on what is offered.

Kwarteng announced claimants working less than 15 hours a week would be penalised if they were not seen to be trying to get more work, in an effort to “get Britain working again”.

Smith said: “Universal credit is the worst thing ever. All your money is conjoined together instead of being allocated for different things. When I was on it, I’d only have £300 left over after paying rent and that didn’t include bills. It puts people at risk.”

It is a particularly strange announcement, she said, given that unemployment rates are at historic lows and most universal credit recipients are in work. In addition, she said, pushing claimants to take on more work is already happening.

“I did 15 hours and they were pushing me to do 25. I actually wanted to work more but it was so hard to get childcare. They don’t help you. The whole system is discouraging,” she said.

“You might need an advance to pay for something up front and they can just refuse you if they don’t feel like the reason is satisfactory.”

Scales added: “You can see why people turn to crime. It’s quick money.”

Nearby at the well-loved Leeds attraction Tropical World, an indoor wildlife park and aquarium, Kwarteng’s measures were equally unpopular.

Katie Fenton-Green, a PE teacher on maternity leave, echoed the sentiments on the high street. “It hasn’t hit us yet but we are more worried than normal. I’ve been looking into merino wool blankets for the baby.”

Katie Fenton-Green, a PE teacher, with her daughter, Nell, at Tropical World in Roundhay. 

Photograph: Richard Saker/The Guardian

Her wife works full time for ITV, which recently gave staff a cost of living bonus. But she is annoyed at the lack of measures in the budget to address energy company profits while people struggle.

“I just don’t feel that the cost is justified while companies are declaring a profit. It would be understandable if the companies were struggling but they’re not, and the government just seems to be helping those who are well off.”

Even those who expect to benefit from the mini-budget cannot make sense of it.

Sam Smith with his daughter Mabel.

 Photograph: Richard Saker/The Guardian

Sam Smith, an accountant, and his partner Tia McKeon, who works in digital marketing, would be better off under the chancellor’s plans to scrap a rise in national insurance payments.

“It sort of feels unnecessary,” Smith said. “Most people wouldn’t mind helping out more where they can and we’re not people who are struggling. It’s always the worst-off who are most affected, though I don’t know what the other option is.”

This article was amended on 23 September 2022. An earlier version said that the energy price cap announced by Liz Truss earlier this month “only benefits those spending over £2,500 a year”. The price cap is a limit on the unit cost of electricity and gas, not on overall bills; and the £2,500 a year figure relates to the average amount that a typical household in Great Britain will pay under the new cap.

UK MINI BUDGET

‘What do they expect me to do?’ Part-time workers dismayed by benefits rule changes

Childcare, health problems or other constraints mean taking action to boost earnings will be a struggle

A woman looks at vacancies at a job centre. The changes to benefit rules require claimants working up to 15 hours a week action to boost their earnings. 

Photograph: Rui Vieira

Julia Kollewe

THE GUARDIAN

Fri 23 Sep 2022

Part-time workers have reacted with dismay at the tightening of rules that could result in a cut to their benefits unless they work longer hours or take steps to increase their earnings.

The changes, which that come into force in January, will require claimants who work up to 15 hours a week (24 hours a week for couples) to take action to boost their earnings. The current threshold is nine hours, but this goes up to 12 hours a week on Monday, and 19 hours a week for couples.

In his growth plan aimed at kickstarting the economy that he unveiled on Friday, the chancellor, Kwasi Kwarteng, said the change would affect 120,000 people on universal credit who were in work on low earnings. “They will be expected to actively search for work and attend weekly or fortnightly appointments at a job centre in order to secure more or better paid work, or they could have their benefits reduced,” he said.
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Jess Philips, Labour MP for Birmingham Yardley, tweeted that the changes would hurt women most. “Women! That’s who this hurts. Women are more likely to work part-time. If chancellor had to pay the billions of pounds of free labour women do he would be borrowing even more dangerous amounts,” she wrote.

A number of part-time workers, some over the age of 50, contacted the Guardian to say they would struggle to increase their hours because of health problems, childcare or other constraints.

Sarah Card, 49, a single parent who works as a behaviour support assistant at a secondary school in Bradford, said: “As I work in a school, I can’t just increase my hours. I have asked about extra hours, but a full-time position would mean starting before 8am and I simply can’t do that due to travel and childcare options not being available so what does the government expect me to do? I will always check things out [jobs], but generally it’s not feasible.”

She added: “I have three young children, the youngest still being at primary school, so the part-time hours fit in perfectly with the school run. Now I’m being told I need to earn another 50% on top from this month and even more from January.”

Card has been working 10 hours a week as a lunchtime assistant after being made redundant from her job as a teaching assistant at her daughter’s primary school. After she lost that job, she had to attend weekly appointments at a job centre out of town, which involves two bus rides and takes about an hour.

“That’s a whole morning for a five-minute appointment. I do not drive so I’m reliant on public transport which not only has increased in price but the services I use have been cut back so I’m restricted with where I can travel to.”

During the school holidays, she sometimes takes her children, aged nine, 11 and 12, to the job centre with her. She also has three grownup children. Card hopes that in future, some of those meetings with a job coach can be done by phone.

Card starts work at 11.45am and finishes at 2pm, giving her an hour and a half before she has to pick up her daughter from primary school. “With my children being the ages they are – we do homework, baths, dinner, then bed – how am I supposed to fit in the 20 hours of job searching each week?”

She added: “I’ve got a job that fits in with my life, and I’m not asking for things to be handed to me.” Card plans to apply for a full-time job once her youngest child starts secondary school in two years’ time.

On top of her £350 gross monthly salary, Card receives £1,410 a month in universal credit. Her rent is £575 and her energy bills are about £300 a month. Her former partner was paying her a similar sum in maintenance every month, but that has stopped because he had an accident and is on statutory sick pay. Adding to her worries, her landlord is selling so she has to find a new home, which is not proving easy.

A 62-year-old chef, who is looking for part-time work and has some health problems, said: “You cannot force people to work longer hours when they cannot physically do so. Plus it does not promote more productivity, in fact quite the opposite – ask any business owner.”

Kwarteng throws UK on sacrificial altar of Trussonomics where only bankers win

John Crace

THE GUARDIAN

23/9/22

Chancellor maxes out with morally bankrupt budget that is anything but mini

Kwasi Kwarteng. What a guy! On Monday he put the fun into funeral with a few gags at Westminster Abbey. On Friday he puts the fizz into fiscal with an event – we would call it a budget were it not for the chancellor having gone out of his way to make sure the Office for Budget Responsibility couldn’t supply any figures to fact-check his economics – that was so high and wild we may never see another. To infinity and beyond! A mini-budget that was anything but mini.

Casino faith-based economics on which he’d bet the bank. The biggest tax giveaway – primarily to the rich – in 50 years while increasing government borrowing to record levels. Time was when Labour used to get it in the neck for uncosted public borrowing. That’s now so last month.


All you have to do now is believe and everything will be OK. It’s the new economics for Brexit Britain. You want growth, you get growth. And if you don’t, then it will be everyone else’s fault for talking Britain down. The country has just been turned into a laboratory experiment for a plan dreamed up by the rightwing Institute of Economic Affairs. Kwarteng does believe. Primarily in himself. His self-confidence is remarkable for a man of relatively ordinary talents. Someone who had always got by with a few glib words. Who could talk the talk but had never been asked to walk the walk. Now was his time to put up. To throw the country on the sacrificial altar and keep his fingers crossed he hadn’t blown it. To boldly go where no man had gone before. Primarily because it was so obviously disastrous.

Some Tories had the grace to look embarrassed, but not Librium Liz.

 Photograph: Jessica Taylor/AP

But this is the brave new world of Trussonomics.It’s like turning on all the taps at once and being surprised when you flood the house.

The Commons was still packed but this was no normal budget statement. There were no flourishes, no long buildup of how brilliant the government had been. And no loud cheering from the Tory benches. Most MPs looked sick. Apprehensive even. Unsure of how they were going to sell this latest Tory iteration to their constituents. Half of the personal tax cuts going to the richest 5% might not be quite the policy to win the hearts and minds of “red wall” voters.

Kwarteng got straight to business. So much to announce, so little time to do it. Tax was too high! Growth was too low! The government had let the economy stagnate. He wasn’t sure what the government had been in the past 12 years, but he and Librium Liz had definitely played no part in it. Which was odd, as most of us could remember them both having been cabinet ministers who had voted for measures they were now trashing. And who had several times made a point of highlighting the dangers of government debt.

Like Truss, Kwasi is a tabula rasa. Free to reinvent himself, unmoored to the past. “We are at the beginning of a new era,” he said. Weirdly, he even sounded as if he believed it. That people really are ready to forgive and forget. To consider this government as Year Zero rather than the continuation of the several failed ones that preceded it. No one else in the chamber seemed to share this view. Some Tories had the grace to look embarrassed. Librium Liz just looked blank. Then she often does. Maybe she too couldn’t quite accept she was getting away with it.

The chancellor moved on to the remedies. First up was loads more borrowing. He couldn’t say how much. And it would be rude to ask. Then on to deregulation. It must be easier to treat workers worse. After all, if people weren’t earning enough it was entirely their own fault for not having a better-paid job. And what about the poor bankers? They hadn’t been able to afford their second homes while their bonuses had been capped. Time to free the Goldman Sachs elite.

Then Kwarteng got on to tax. There was far too much of it. If he had his way no one would be paying a penny. It would be up to everyone to either sink or swim. There were far too many people idling around, relying on schools and the NHS. But he couldn’t bring himself to cut taxes completely. So he was just going to do so for the most well off. Because that was obviously the fair thing to do.

This was a budget devoid of moral purpose. Even Boris Johnson hadn’t sunk this low. It’s come to something when Kwarteng now finds himself lower on the ethical balance sheet to The Convict. Though it’s all of a piece. Every time you think the government couldn’t possibly sink any lower it finds new, creative ways of doing so.

Labour’s Rachel Reeves put in a decent reply – her highlight was chucking the six previous failed Tory growth plans across the dispatch box and asking why the new one should be any better – but she lacked a bit of edge. Almost as if her whole speech had been pre-written and she wasn’t able to grasp just how reckless the Tories were being. A little more ad-libbing wouldn’t have gone amiss.

For the Tories, only John Redwood and Richard Drax were wholly enthusiastic. This was all their wet dreams come at once. Others, such as Mel Stride and John Glen, were openly sceptical. Of Johnson, Rishi Sunak and Michael Gove, there was no sign. They are now non-people. Long before the end, every Tory MP had melted away and Kwarteng was left to take questions from opposition backbenchers.

The chancellor looked increasingly lost and lonely. His self-confidence had definitely taken a hit over the past two and a half hours. Not least because the markets had responded to his mini-budget with a resounding thumbs down. Not even Kwasi could wholly convince himself now that he knew something no other financial analyst did. Though give him a day or so …

Explainer

Banks among biggest beneficiaries of Kwarteng’s mini-budget


From scrapping the cap on bonuses to slashing red tape, the chancellor unveils a raft of policies he says will boost economic growth

Kalyeena Makortoff

Banking correspondent
@kalyeenaFri 23 Sep 2022 

Banks will be among the biggest beneficiaries of Kwasi Kwarteng’s mini-budget after he announced a raft of policies to help costs, boost profits, lure staff, fuel house prices and slash red tape.

Scrapping the banker bonus cap

One of the more controversial announcements on Friday was the decision to scrap the EU banker bonus cap, which has limited payouts to two-times workers’ salaries since 2014.

The rules were meant to end a bonus culture that prioritised short-term profits over longer-term stability in the run-up to the financial crisis. But Conservative politicians, including then chancellor George Osborne, railed against the cap from the start, warning it would harm competitiveness and increase banks’ fixed costs.

The new government is taking advantage of Brexit to scrap the cap, in a move likely to be be welcomed by employers who use variable pay to slash costs in slower years.

However, headhunters warn the effect will be marginal and unlikely to create more jobs or lure many high-earning bankers to the UK, given European staff tend to enjoy the reliability of salary-focused income, while US bankers are unlikely to leave New York for the same pay in London.

The decision to lift the cap perplexed some bank bosses who said they had not lobbied for the change, nor were they consulted on the proposals.

In the meantime, high-earning City bankers will still have an income tax reduction to look forward to.

Cutting stamp duty to prop up the housing market

   

Lenders have been accused of being slow to pass on rate rises 

to savers while increasing mortgage rates for borrowers. 

Photograph: Clynt Garnham Business/Alamy

Rising interest rates will boost banks’ net interest margins – which are a key measure of profitability and account for the difference between what is charged for loans and paid out for deposits. Lenders have been accused of being slow to pass on rate rises to savers while increasing mortgage rates for borrowers.

Liz Truss’s team’s decision to incentivise prospective homebuyers by doubling the threshold at which they start paying stamp duty to £250,000 will also prop up the housing market, which has showed signs of slowing. They have also increased that figure from £300,000 to £425,000 for first-time buyers.

Lloyds Banking Group, which owns Halifax and is the UK’s largest mortgage lender, said in July that it expected its rate of lending to grow by single digits over the next 12-18 months in light of forecasts of a soaring interest rate.

However, a cut to stamp duty is likely to push lenders’ forecasts higher when they release third-quarter results in October and increase profit expectations.
Slashing red tape

The chancellor also trailed “an ambitious package of regulatory reforms” that he said would be revealed this autumn. It is unclear whether this will be in addition to the financial services bill, which will essentially repeal EU financial regulations.

Some of the biggest changes already in train involve forcing regulators to consider the “competitiveness” of firms when applying UK regulations, rather than just whether they are treating consumers fairly or holding enough capital to cushion against potential risks. That is despite economists warning it is an inappropriate throwback to pre-crisis conditions.

And despite Kwarteng stressing that he considers the independence of the Bank of England to be “sacrosanct”, the government is still planning to give itself powers “to direct a regulator to make, amend or revoke rules where there are matters of significant public interest” – a move that could also benefit the City firms lobbying for changes to UK rules.

Cancelling corporation tax hikes

Kwarteng also confirmed the government would hold corporation tax at 19%, rather than raising it to 25% as originally planned by the former chancellor Rishi Sunak.

That move alone is expected to save City firms a combined bill of £4.5bn between 2023 and 2025, according to analysis compiled by the House of Commons Library.

However, Kwarteng is cancelling a planned reduction in the additional bank surcharge that was meant to offset the corporation tax rise, meaning it will stay at 8%, rather than dropping to 3% next year. Smaller lenders including the Co-operative Bank will still benefit from a higher threshold, with the chancellor promising the surcharge will only apply to lenders earning at least £100m, rather than £25m.

The combined rate of tax for most banks and building societies, however, will stay at 27%.

Bills freeze to keep companies afloat

Fears of widespread corporate failures among business borrowers were growing, with companies more exposed to price fluctuations than households since they do not benefit from the UK’s energy cap.

But Truss’s decision to cut the unit price of energy for businesses for at least six months means banks will be less worried about businesses going under, shielding them from a potential sharp increase in defaults.

Pound falls below $1.10 for first time since 1985 following mini-budget

Sell-off as investors take fright at prospect of surge in government borrowing to cover huge tax cuts

Sterling was down by two cents agains the dollar to a fresh 37-year low.

 Photograph: Dado Ruvić/Reuters

Richard Partington and Angela Monaghan  

Fri 23 Sep 2022 

The pound has fallen below $1.10 for the first time since 1985 as investors took fright at the prospect of a surge in government borrowing to pay for Kwasi Kwarteng’s sweeping tax cuts.

Issuing a punishing verdict on the chancellor’s “dash for growth”, traders sent sterling tumbling on Friday in a broad-based sell-off in response to the huge rise in public borrowing required to finance his plans.

Analysts at the US investment bank JPMorgan said the market reaction demonstrated “a broader loss of investor confidence in the government’s approach”, reflecting the damage to Britain’s standing in global markets.

Citi analysts said the chancellor’s tax giveaway, the biggest since 1972 , “risks a confidence crisis in sterling”.

The pound was down two and a half cents against the dollar to a fresh 37-year low of $1.0993 as fears over the future path for the public finances also triggered a surge in government borrowing costs. The fall below the symbolic $1.10 mark came after the chancellor announced £45bn of tax cuts directed at higher earners.

The FTSE 100 fell more than 2% to trade below 7,000 for the first time since early March, after Russia’s invasion of Ukraine, while the cost of borrowing for the UK government on international markets rose by the most in a single day for more than a decade.

Two-year UK government bond yields – which are inversely related to the value of bonds and rise as they fall – jumped by as much as 0.4 percentage points to come close to 4%, reaching the highest level since the 2008 financial crisis.

Borrowing costs on 10-year bonds rose by more than 0.2 percentage points to trade close to 3.8%, continuing a dramatic climb under way since Liz Truss took over as prime minister earlier this month. At the start of September, yields on benchmark UK sovereign debt have risen by almost one percentage point, significantly more than for comparable advanced economies.

“[It’s] really hard to overstate the degree to which the Kwarteng budget has just wrecked the gilt market,” said Toby Nangle, a former fund manager at Columbia Threadneedle. Illustrating the scale of the turmoil, he said five-year gilt yields had moved by the most in a single day since 1993 - surpassing the Covid pandemic, the 2008 financial crisis, and 9/11.

Investors warned Britain’s experiment with Trussonomics comes at a challenging moment with a soaring US dollar, rising interest rates from global central banks, and with higher borrowing costs across advanced economies amid weaker economic growth and soaring inflation.

However, they said Britain was being singled out after years of the government damaging its reputation for sound economic management, compounded by the steps being taken by the new prime minister.

Gabriele Foa, a portfolio manager at Algebris Investments, said: “We are in a situation in which the UK government has lost a lot of credibility in the past three to four years and pushed the market’s patience in a lot of ways.

“[It’s about] Covid management, government instability, the management of Brexit. It is just a big, let’s say, series of concerns. The UK was in the first league, [but] it’s moving from first, to second to third. If you give some signs that you’re not reliable you move leagues.”

It comes after the Treasury said it would finance the chancellor’s tax cuts and the energy price guarantee for consumers and businesses with £72.4bn in additional UK government debt sales than planned for the current financial year.

Instead of the £161.7bn planned by the Debt Management Office in April, the Treasury said it would now sell £234.1bn of government bonds to international investors in 2022-23.

The change will mean investors are being approached to buy significantly more government debt than previously expected, and comes in addition to the Bank of England preparing to sell £80bn of gilts held on its balance sheet thanks to its quantitative easing programme.

Markets bet the Bank would be forced by Kwarteng’s support schemes to ramp interest rates above 5% by May next year – more than double the current rate of 2.25% – on the expectation they would add significantly to inflationary pressures.

Vivek Paul, a senior portfolio strategist at BlackRock, said: “The credibility of the UK is what markets are reacting to.

“Over time we will know if there will be a fundamental change. The jury is out, [but] the initial reaction from markets is not a ringing endorsement. Let’s put it that way.”

The moves come as the Bank responds to soaring inflation by raising interest rates, despite warning that Britain’s economy is already in recession.

Antoine Bouvet, a senior rates strategist, and Chris Turner, the global head of markets at the Dutch bank ING, said the conditions amounted to a “perfect storm” for the UK as global markets shun sterling and gilts.

“Price action in UK gilts is going from bad to worse. A daunting list of challenges has arisen for sterling-denominated bond investors, and the Treasury’s mini-budget has done little to shore up confidence.”

A look back to 1972, the last time tax cuts so big were brought in

At the time of Anthony Barber’s ‘dash for growth’ budget, a pint of milk cost 6p, Nilsson was top of the charts and Brian Clough was in his heyday at Derby County

Chancellor Anthony Barber outside 11 Downing Street in 1971. 

Photograph: William Lovelace/Getty Images

Martin Belam

THE GUARDIAN

Fri 23 Sep 2022


The Institute for Fiscal Studies has said Kwasi Kwarteng’s announcement on Friday amounts to the biggest tax-cutting budget since Anthony Barber’s on the 21 March 1972, just over 50 years ago. Here is a roundup of some of the prices you would have been paying, and things you might have been watching and listening to at the time.

Cost of living crisis, 1972 style

Barber’s budget was called the “dash for growth”, but the prices of everyday items seem laughably cheap by today’s standards. A pint of milk cost 6p in March 1972, butter was around 13p and a gallon of four-star petrol – leaded, naturally – would have set you back 35p or about 8p per litre. If you’d just bought a brand new Ford Cortina to fill up, the car would have cost you £963. The land registry suggests the average house price was £5,158. If you still couldn’t afford a car or a house, you could always drown your sorrows with a 14p pint of beer while smoking the packet of 20 cigarettes that had set you back around 25p inside the pub. Just 13 months after decimalisation, though, people could still be forgiven for getting confused about prices in “new money”.

A Ford Cortina would have set you back £973 in 1972.

 Photograph: David Newell Smith/The Observer

Television, when it was actually on

In an era when both BBC channels still had periods of “closedown” scattered through the day and parliament was not televised, on BBC One Brian Widlake presented an afternoon budget special entitled Budget Special 1972: Confidence or Crisis? with contributors including Brian Walden and Robin Day.

That meant children’s programmes were shifted over to BBC Two, where you could catch Tony Hart on Vision On and there was a Jackanory story to enjoy. Later that night on BBC One, Robert Hardy narrated a documentary about the British Empire and Barry Norman was reviewing movies in Film 72. Of course, to have enjoyed all that, you would have had to pay for your television licence, which was £7 for a black-and-white set and £12 if you wanted to watch in colour.

The sounds of the 70s

The No 1 single in the UK that week was Without You by Nilsson, a track that was also a No 1 in Ireland, Australia and the US. Also in the top ten were American Pie by Don McLean and Hold Your Head Up by Argent. Lindisfarne were top of the album charts with Fog on the Tyne, an album that spent over a year in the UK chart including four weeks in the top spot.

David Bowie performs Starman on Top of the Pops in 1972. 

Photograph: YouTube/GreatGuitarHeroes

The US singer-songwriter Judee Sill was the guest musician on the Old Grey Whistle Test on the day of the budget, while Thursday’s edition of Top of the Pops is one you will not have seen repeated on BBC Four recently, as it was presented by Jimmy Savile. It included the Chiffons, Olivia Newton-John, Labi Siffre and Tom Jones.

The Radio One DJ lineup on the day of the budget was a veritable who’s who of broadcasting, including Tony Blackburn, Jimmy Young, Dave Lee Travis, Johnny Walker, Terry Wogan, Annie Nightingale and John Peel. John Timpson and Robert Robinson were presenting the Today programme on Radio 4, while Radio 2 handled the coverage of the budget in the afternoon.
Clough’s glory days with Derby County

In football, Derby County were on their way to winning their first English Division One title under the genius management of Brian Clough. Ahead of the budget they beat Leicester 3-0, while Liverpool, their rivals for the title, thrashed Newcastle 5-0 . Leeds United were busy dispensing with Tottenham 2-1 in the FA Cup on their way to eventually winning it. In Scotland, Celtic were heading to the seventh of nine consecutive titles, while Glasgow Rangers would eventually lift the now-defunct European Cup-Winners Cup that year.

Brian Clough (left) and his assistant Peter Taylor show off the League Championship trophy to jubilant Derby County fans in May 1972. 

Photograph: PA Photos/PA

In rugby union, Scotland had won the Calcutta Cup 23-9 against England at Murrayfield the weekend before the budget, in a Five Nations tournament truncated by the political upheaval following Bloody Sunday in Northern Ireland that January, which meant Ireland’s home fixtures against Scotland and Wales were cancelled.

Elsewhere in sport, Eddy Merckx won both the Giro D’Italia and Tour de France, Jack Nicklaus was the highest earner on the golf circuit, Alex Higgins was world snooker champion, and Emerson Fittipaldi took the F1 crown.
Also in the news

Nasa launched Pioneer 10 in March on its way to study Jupiter before becoming the first human-made object to leave the solar system, and Apollo 16 was scheduled to head to the moon in early April. The Godfather had its premiere in New York before going on to be the highest-grossing movie of the year ahead of The Poseidon Adventure.

Nasa’s Pioneer 10 spacecraft. Photograph: Associated Press

Closer to home, just a few days after the budget London would impose direct rule on Northern Ireland, and the summer of 1972 was the last time you could legally leave school at 15. The age was raised to 16 from 1 September.
The more things change …

Some things remain surprisingly constant. When Barber stood up to make his budget speech, the third Doctor Who, Jon Pertwee, was part of the way through a six-part adventure pitting him against The Sea Devils – monsters that returned to celebrate their own own 50th anniversary in this year’s Doctor Who Easter Special starring the 13th Doctor, Jodie Whittaker.
And what happened to Anthony Barber?

Within months of his budget the chancellor was forced to float the pound, which led to a sharp decrease in its value and huge inflationary pressure on the economy, which failed to grow in the way his tax-cutting measures had been intended to stimulate. After industrial unrest, Ted Heath called a general election early in 1974 and Barber lost his job as chancellor as Harold Wilson was returned to office with a minority Labour government. Barber did not stand for re-election when Wilson called the second general election of 1974 in October in a bid to secure a majority, which he narrowly achieved. Barber went off to work in the world of banking, where at one point a certain John Major was under his tutelage.

UK 

‘A budget for the 1%’: government accused of huge tax cut for super-wealthy

Kwasi Kwarteng’s measures benefit the rich at expense of struggling families, say critics

• Mini-budget 2022: what does it mean for your money?
• The panel: does the mini-budget offer any solutions?
• Live updates: reaction to Kwarteng’s mini-budget

Kwasi Kwarteng delivers his mini-budget statement on Friday. 

Photograph: Jessica Taylor/House of Commons/Reuters

Rupert Neate Wealth correspondent

@RupertNeate

Fri 23 Sep 2022 

The government stands accused of introducing a “simply staggering, huge tax cut for richer households” that will leave “the super-wealthy laughing all the way to the actual bank”, while allowing hundreds of thousands of already-struggling families to fall deeper into poverty.

On Friday, Kwasi Kwarteng, the chancellor, announced a string of tax giveaways and other measures that economists and campaigners claim will hugely benefit the super-rich at the expense of hardworking people.

The measures include:

• Scrapping the 45p additional tax rate on earnings above £150,000.

• Axing the cap on bankers’ bonuses.

• Scrapping the planned rise in corporation tax to 25%.

• Doubling the stamp duty “holiday” on property purchases to £250,000.

• Allowing the overseas wealthy to shop duty free anywhere in the UK – not just at airports.

• Axing the planned rise in national insurance contributions.

• Tightening the benefits rules to make it harder for part time workers on universal credit.

The combined package of measures announced in the mini-budget means that someone who currently makes £1m will gain £55,220 a year, while someone earning £20,000 will be just £157 better off, according to calculations by the Resolution Foundation.

Torsten Bell, the chief executive of the thinktank, said the policies “amount to a simply staggering, huge tax cut for richer households”.

Bell described the mini-budget as socially divisive, and said almost 45% of the £45bn worth of tax cuts would “go to the richest 5% alone, who will be £8,560 better off”.

“In contrast, just 12% of the gains will go to the poorest half of households, who will be £230 better off on average next year.”

There are 3,519 bankers working in the UK making more than €1m a year (£880,000) according to the European Banking Authority (EBA). That is more than seven times as many as those in Germany, which has the second highest number of €1m-a-year bankers. The EBA figures show 27 UK bankers made more than €10m in 2019 (the latest year available).

Nicola Sturgeon, Scotland’s first minister, said: “The super-wealthy laughing all the way to the actual bank. While increasing numbers of the rest are relying on food banks – all thanks to the incompetence and recklessness of this failed UK government.”

Paul Johnson, the director of the Institute for Fiscal Studies thinktank, said the abolition of the 45p tax rate on incomes over £150,000 was “a surprise” that “helps roughly highest income 1%.”

Johnson said combined the measures amounted to “the biggest tax cutting event since 1972”.

Alison Garnham, the chief executive of Child Poverty Action Group, described the budget as “a statement for the 1%” and said it was “more bankers’ bonuses than helping hungry kids”.

“Today was a vital opportunity to provide reassurance and support to those who need it the most,” she said. “But instead the government risks a collision with reality, and the 4 million kids currently living in poverty in the UK will be forced to pay the price.”

Frances O’Grady, the general secretary of the TUC, said: “The government was “making it easier for City bankers to help themselves – making it harder for workers to win better pay and conditions”.

Luke Hildyard, the executive director of the High Pay Centre, a thinktank that focuses on excessive pay, said: “By scrapping the bankers’ bonus cap and cutting tax on the richest 1% of the population, the government is doubling down on a failed economic strategy.

“The richest households in the UK already rake in more than the richest in most European countries.”

He said that instead of “bending over backwards for people who are already extremely well off”, the government should concentrate on “re-balancing income and wealth in favour of low- and middle-income earners”.

James Perry, a multimillionaire and founding member of Patriotic Millionaires, a campaign group calling for higher taxes on the very wealthy, described Kwarteng’s mini-budget as “an abdication of responsibility for sound financial management”.

Perry, who made a fortune from a frozen ready meals company, said that instead of scrapping the high rate of tax Kwarteng should have introduced more taxes on the wealthy.

“We have to deal with the phenomenon of extreme wealth, a vast pool of capital held by a very few. Policies like scrapping the bankers’ bonus cap and the top rate of income tax will do the opposite.

“When 70% of the public are saying it’s time to raise taxes on extreme wealth to invest in our country – and millionaire investors like me agree – why would the government not do the right and obvious thing and get on with it?”

Kwarteng scraps top 45% rate of income tax and cuts stamp duty

Chancellor abolishes cap on banker bonuses, cuts basic income tax and national insurance in mini-budget that favours top earners

Kwasi Kwarteng delivers sweeping cuts in latest mini-budget – video highlights

Phillip Inman and Rowena Mason

Fri 23 Sep 2022 

Kwasi Kwarteng has bet the government’s re-election in 2024 on the biggest tax cuts in 50 years after the UK chancellor announced reductions in the top 45% rate of income tax, national insurance and stamp duty worth £45bn.

Facing accusations of a “class war” mini-budget that rewarded the rich more than those on lower incomes, Kwarteng said his efforts to boost growth and energise the economy included helping all households after he brought forward a planned 1p cut in the basic rate of income tax from 2024 to next year.

The top 45p income tax rate on earnings of more than £150,000 a year will be scrapped, leaving the highest rate at 40p. The main income tax changes predominantly apply in England, Wales and Northern Ireland.


Kwasi Kwarteng announces ‘investment zones’ with huge tax cuts for businesses

The Treasury acknowledged after the budget that about 660,000 of the highest earners will benefit from the scrapping of the 45p rate, getting back on average £10,000 a year.

A Treasury spokesperson said the chancellor “disagreed” that it was a budget for the rich or that it was “trickle-down economics”, but the aim was that “growing the economy benefits everyone”.

A rise in national insurance of 1.25% brought in earlier this year will be reversed, saving households £330 a year.

Thresholds for paying stamp duty – which applies in England and Northern Ireland – will be increased, cutting the tax paid on purchasing homes.

The threshold at which first-time buyers begin to pay stamp duty will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers’ relief can be claimed will also increase, from £500,000 to £625,000. The chancellor said the cuts would be permanent.

Kwarteng also confirmed that caps on bankers’ bonuses would be scrapped.

Promising a new era of growth, he said: “High taxes reduce incentives to work and they hinder enterprise.”

Against a backdrop of high inflation and forecasts that Britain faces a long recession, the chancellor cancelled a rise in corporation tax from 19% to 25% next year.

“In the context of the global energy crisis it is entirely appropriate for the government to take action,” he said, adding that “fiscal responsibility remains essential” and he would be allowing the Office for Budget Responsibility (OBR) to examine the Treasury’s spending plans before the end of the year. The OBR, which provides independent economic forecasts based on the government’s plan, was blocked from assessing the mini-budget by Kwarteng.

The Treasury, when asked why it could not produce OBR forecasts, claimed it would not be able to publish full forecasts in time. It admitted there were no forecasts for how much the growth plan would boost growth, or when Kwarteng hoped to reach the 2.5% growth target.

He is reviewing his fiscal rules but these will not be set out at this stage. The Treasury continued to insist it was not a budget, so therefore was not accompanied by the traditional distributional impact showing how the measures would affect the rich and the poor.

Labour described the mini-budget as a “menu without prices” that rewarded better-off households while gambling with the public finances.

Conservative backbenchers gave an extremely muted response to Kwarteng, unusually refraining from cheering or banging their seats behind the chancellor. Several Tory MPs told the Guardian they were worried about the political implications of giving tax cuts to the rich, while providing little help for most of the population with the cost of living beyond the 1p cut in income tax.

In contrast, Labour MPs were outraged by the measures and buoyed by the idea that voters would reject the Tories, with one shadow cabinet minister saying they thought it would “go down like a bucket of sick” in the “red wall” constituencies.

Leftwing Labour MPs Richard Burgon and Paula Barker said Kwarteng’s decision to skew tax cuts to the better-off amounted to a campaign of “class war”.

Financial markets were fearful about the extra borrowing needed to fund Kwarteng’s huge tax cuts, sending the pound plunging below $1.11 for the first time since 1985. The government’s borrowing costs jumped after the two-year borrowing rate doubled from last month to 4%.

Benchmark 10-year gilt prices also weakened, pushing up their yield to the highest since 2011.


British retailers welcome planned return of VAT-free shopping for tourists

Paul Johnson, the director of the Institute for Fiscal Studies, said the tax cuts would cost £41bn in 2024 and £45bn in 2026, making the mini-budget the “biggest tax-cutting event since 1972”.
Recalling the Heath government’s attempt in the early 1970s to boost growth with huge tax cuts orchestrated by the then chancellor, Tony Barber, Johnson said: “Barber’s ‘dash for growth’ then ended in disaster. That budget is now known as the worst of modern times. Genuinely, I hope this one works very much better.”

Kwarteng also announced planned rises in beer, wine and spirit duties would be cancelled and said he would cut welfare benefits if unemployed people failed to comply with the requirements to search for a job.

He said it was outrageous that strikes were bringing vital services to a halt. He said he would bring forward legislation making it illegal to hold a strike from taking place until “talks have genuinely broken down”.