September 23, 2022
A employee walks inside a Sainsbury's supermarket in Richmond, west London
Low-income Britons will see few benefits from the historic tax cuts announced by the country’s new finance minister on Friday, union leaders and anti-poverty campaigners said, warning that the measures would widen the rich-poor divide.
Chancellor Kwasi Kwarteng scrapped the top rate of income tax as well as a planned rise in corporate taxes in his “mini-budget”, and said bankers’ bonuses would no longer be capped – measures Prime Minister Liz Truss hopes will help double Britain’s rate of economic growth.
The tax cuts will benefit the lowest earners too, as will the reversal of a recent increase in national insurance (NI) contributions, but critics said the policies promised little relief to the poorest as they grapple with a cost-of-living crisis.
“This budget is Robin Hood in reverse. We should be rewarding work, not wealth,” said Frances O’Grady, general-secretary of the Trades Union Congress (TUC) federation.
“But at the first opportunity, Liz Truss is holding down wages and lining the pockets of big corporations and City bankers,” O’Grady added in a statement.
Low-income Britons are feeling the pinch of inflation, which hit a 40-year high earlier this year, with soaring food, energy and borrowing costs forcing growing numbers to turn to charity food banks.
Friday’s announcements will bring them little comfort, said Polly Jones, head of policy and research at the Trussell Trust, which supports more than 1,300 food bank centres across Britain.
“For the people we see visiting food banks who have the lowest income … we can’t see that today’s mini-budget provides any additional support to help them buy food and other essentials,” she said.
‘NO GAIN’
Under the economic agenda presented by Kwarteng to parliament, people earning more than 150,000 pounds ($165,500) a year will see their tax rate slashed by five percentage points to 40%.
The lowest earners will see a reduction of one percentage point on their tax rate to 19%, a change Kwarteng said would help more than 30 million people, with each receiving an average of 170 pounds extra a year.
But the poorest households, including those dependent on welfare benefits, are unlikely to see any additional income, said Mubin Haq, chief executive of independent charitable foundation abrdn Financial Fairness Trust.
“For those who fall below that sort of income threshold in terms of earnings, and particularly for people who are on benefits, there’s no gain there,” Haq told the Thomson Reuters Foundation.
The cancellation of the recently introduced health and social care NI levy will benefit the poorest 10% by just 11.50 pounds a year, he estimated.
“(This) is completely negligible whereas for those at the top it is a gain of over 2,000 pounds,” Haq said.
‘RETURN TO THE PAST’
Kwarteng said scrapping the cap on bankers’ bonuses – introduced in the wake of the 2008/09 financial crisis – would accelerate moves to bolster the City of London’s competitiveness as a global financial centre, but it drew strong criticism.
“It seems that the government fundamentally misunderstands whom the cost-of-living crisis is hitting hardest,” Mohsin Rashid, co-founder of money-saving shopping app ZIPZERO, said in a statement.
“Allowing bankers to receive greater bonuses, with incalculable rises to incomes on top of six-figure salaries … seems invariably at odds with their strategy.”
There was good news for people planning to buy their own home, with a cut to the stamp duty levied on property purchases taking an estimated 200,000 homebuyers out of the tax bracket, Kwarteng said.
However, anti-poverty campaigners criticised the Chancellor’s omission of a windfall tax on energy companies, currently seeing record profits due to increasing energy prices, to help the poorest already struggling with rising bills.
Simon Francis, End Fuel Poverty Coalition Coordinator, said that the mini-budget had said little on helping to protect 7 million households facing fuel poverty this winter.
“Even with the measures pledged by the government so far, there is now just a week to go until energy bills increase by 64% compared to last winter,” Francis said.
“Millions of people will spend the winter struggling in cold damp homes.”
($1 = 0.9061 pounds)
Kwasi Kwarteng’s budget is a declaration of war on poor people
On 6 September, Liz Truss assumed the office of prime minister after receiving support from 57.4% of Conservative Party members who voted in the leadership election.
Rich get richer
The winners from the Tory mini-budget are the well-off – those earning more than £150k a year. Indeed, it’s understood that someone earning more than £1m a year will be the beneficiary of tax cuts of more than £55k a year.
Moreover, the so-called tax cuts for the less well-off is an illusion, explains Howard Beckett of Unite the Union:
Other budgetary measures include removing the cap on how much bankers get in bonuses.
The Resolution Foundation posted a graph that demonstrates how the rich will disproportionately benefit from the budget:
“Brutal” measures
Kwarteng is also targeting Universal Credit recipients by threatening to pause or reduce their benefits.
Independent SAGE member and former WHO director Anthony Costello tweeted that these measures are “brutal”:
Meanwhile, Greater Manchester mayor Andy Burnham called the measures in the budget “immoral”. He also posted a graph that sums up the impact Kwarteng’s mini-budget will have:
The energy bills rip-off
Then there’s the energy bill crisis, which will leave poor people that much more worse off. Beckett points out how these bills are “a complete rip off”:
As The Canary has previously pointed out, instead of a windfall tax on the energy companies, those companies will receive billions of pounds. And the cost will be met by tax payers.
Failing economy
In the wake of Kwarteng’s budget and the rise in the cost of borrowing, the pound tumbled against the US dollar to its lowest level since 1985. It will likely mean prices of imports will rocket, leading to higher prices generally, as well as higher inflation. And it’s predicted that interest rates could rise to 5% in 2023, affecting mortgages and consumer credit to add to the squeeze.
Regarding Truss’s economic strategy, this is supposedly based on the myth of trickle down economics. One Twitter user neatly summed this up:
As for exports, another Twitter user pointed out that Brexit is costing the UK £100bn a year in lost output, according to the Financial Times:
Also, the number of UK businesses exporting goods to the EU fell 33%, from 27,321 businesses in 2020 to 18,357 in 2021, according to data from HMRC.
Other anti-worker measures
Previously, The Canary warned of other measures planned for by Truss. For example, we published details of how Truss intends to destroy hard-won employment rights and environmental protections.
And earlier in 2022, Kwarteng changed the law to make strike-breaking legal:
Class war moves up a level
The Canary has been comprehensively covering the Tories’ class war in its many manifestations. Now, Kwarteng’s mini-budget takes that war to another level, so further widening the gap between rich and poor.
The Tories’ brutal measures will likely cause more people to become destitute, starve, or die. Moreover, inflation will ensure interest rates continue to rise, affecting those on mortgages or in debt. Overall, except for the very wealthy, these latest measures will negatively affect millions of people.
As for Truss, she is backed by the secretive European Research Group. This is the same group that’s responsible for the hard-line approach on Brexit which the Johnson government adopted. So expect more hard-line measures in the coming months.
It’s time we fought back, as Beckett says:
Just how much more can people take?
On 6 September, Liz Truss assumed the office of prime minister after receiving support from 57.4% of Conservative Party members who voted in the leadership election.
Those members consist of a mere 0.4% of the UK population.
Now, Truss’s laughing chancellor Kwasi Kwarteng has unveiled a mini-budget which can only be described as an all-out declaration of war on workers, particularly the poor.
Meanwhile, the Bank of England has made it clear that the UK is now in recession.
Now, Truss’s laughing chancellor Kwasi Kwarteng has unveiled a mini-budget which can only be described as an all-out declaration of war on workers, particularly the poor.
Meanwhile, the Bank of England has made it clear that the UK is now in recession.
Rich get richer
The winners from the Tory mini-budget are the well-off – those earning more than £150k a year. Indeed, it’s understood that someone earning more than £1m a year will be the beneficiary of tax cuts of more than £55k a year.
Moreover, the so-called tax cuts for the less well-off is an illusion, explains Howard Beckett of Unite the Union:
Other budgetary measures include removing the cap on how much bankers get in bonuses.
The Resolution Foundation posted a graph that demonstrates how the rich will disproportionately benefit from the budget:
“Brutal” measures
Kwarteng is also targeting Universal Credit recipients by threatening to pause or reduce their benefits.
Independent SAGE member and former WHO director Anthony Costello tweeted that these measures are “brutal”:
Meanwhile, Greater Manchester mayor Andy Burnham called the measures in the budget “immoral”. He also posted a graph that sums up the impact Kwarteng’s mini-budget will have:
The energy bills rip-off
Then there’s the energy bill crisis, which will leave poor people that much more worse off. Beckett points out how these bills are “a complete rip off”:
As The Canary has previously pointed out, instead of a windfall tax on the energy companies, those companies will receive billions of pounds. And the cost will be met by tax payers.
Failing economy
In the wake of Kwarteng’s budget and the rise in the cost of borrowing, the pound tumbled against the US dollar to its lowest level since 1985. It will likely mean prices of imports will rocket, leading to higher prices generally, as well as higher inflation. And it’s predicted that interest rates could rise to 5% in 2023, affecting mortgages and consumer credit to add to the squeeze.
Regarding Truss’s economic strategy, this is supposedly based on the myth of trickle down economics. One Twitter user neatly summed this up:
As for exports, another Twitter user pointed out that Brexit is costing the UK £100bn a year in lost output, according to the Financial Times:
Also, the number of UK businesses exporting goods to the EU fell 33%, from 27,321 businesses in 2020 to 18,357 in 2021, according to data from HMRC.
Other anti-worker measures
Previously, The Canary warned of other measures planned for by Truss. For example, we published details of how Truss intends to destroy hard-won employment rights and environmental protections.
And earlier in 2022, Kwarteng changed the law to make strike-breaking legal:
Class war moves up a level
The Canary has been comprehensively covering the Tories’ class war in its many manifestations. Now, Kwarteng’s mini-budget takes that war to another level, so further widening the gap between rich and poor.
The Tories’ brutal measures will likely cause more people to become destitute, starve, or die. Moreover, inflation will ensure interest rates continue to rise, affecting those on mortgages or in debt. Overall, except for the very wealthy, these latest measures will negatively affect millions of people.
As for Truss, she is backed by the secretive European Research Group. This is the same group that’s responsible for the hard-line approach on Brexit which the Johnson government adopted. So expect more hard-line measures in the coming months.
It’s time we fought back, as Beckett says:
Just how much more can people take?
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