Kwasi Kwarteng has heralded the “beginning of a new era” for Britain’s economy that will be dominated by tax cuts – funded through government borrowing – and deregulation in an unapologetic pursuit of growth.
In the process, the Chancellor has effectively rode roughshod over not only the economic legacy of Boris Johnson and Rishi Sunak, but the economic orthodoxy adopted by all Conservative governments since 2010.
Here is what he said:
1. On redistribution:
“For too long in this country, we have indulged in a fight over redistribution. Now, we need to focus on growth, not just how we tax and spend.
“We won’t apologise for managing the economy in a way that increases prosperity and living standards. Our entire focus is on making Britain more globally competitive – not losing out to our competitors abroad. The Prime Minister promised that this would be a tax-cutting government.”
2. On bankers’ bonuses:
“A strong UK economy has always depended on a strong financial services sector. We need global banks to create jobs here, invest here, and pay taxes here in London, not Paris, not Frankfurt, not New York.
“All the bonus cap did was to push up the basic salaries of bankers, or drive activity outside Europe. It never capped total remuneration, so let’s not sit here and pretend otherwise. So we’re going to get rid of it.”
3. On Britain’s tax burden:
“Higher taxes on capital and labour have lowered returns on investment and work, reducing economic incentives and hampering growth still further.
“This cycle has led to the tax burden being forecast to reach the highest levels since the late 1940s – before even Her Late Majesty acceded to the throne. We are determined to break that cycle.”
4. On “levelling up”:
“We’re in early discussions with nearly 40 places like Tees Valley, the West Midlands, Norfolk and the West of England to establish Investment Zones.
“And we’ll work with the devolved administrations and local partners to make sure Scotland, Wales and Northern Ireland will also benefit, if they are willing to do so.
“If we really want to level up, Mr Speaker – we have to unleash the power of the private sector.”
5. On abolishing the top rate of tax:
“This will simplify the tax system and make Britain more competitive. It will reward enterprise and work. It will incentivise growth. It will benefit the whole economy and whole country.”
6. On Government borrowing:
“In the context of a global energy crisis, it is entirely appropriate for the Government to use our borrowing powers to fund temporary measures in order to support families and businesses.
“That’s what we did during the Covid-19 pandemic. A sizable intervention was right then…and it is right now. The heavy price of inaction would have been far greater than the cost of these schemes.”
7. On ‘barriers for enterprise’:
“There are too many barriers for enterprise. We need a new approach to break them down. That means reforming the supply side of our economy.
“Over the coming weeks, my Cabinet colleagues will update the House on every aspect of our ambitious agenda. Those updates will cover: the planning system, business regulations, childcare, immigration, agricultural productivity, and digital infrastructure.”
8. On unions:
“At such a critical time for our economy, it is simply unacceptable that strike action is disrupting so many lives. Other European countries have Minimum Service Levels to stop militant trade unions closing down transport networks during strikes.
“So we will do the same. And we will go further. We will legislate to require unions to put pay offers to a member vote, to ensure strikes can only be called once negotiations have genuinely broken down.”
9. On investment zones:
“To support growth right across the country, we need to go further, with targeted action in local areas.
“So today, I can announce the creation of new investment zones. We will liberalise planning rules in specified agreed sites, releasing land and accelerating development.”
10. On corporation tax:
“The interests of businesses are not separate from the interest of individuals and families. In fact, it is businesses that employ most people in this country. It is businesses that invest in the products and services we rely on.
“Every additional tax on business is ultimately passed through to families through higher prices, lower pay, or lower returns on savings. So I can therefore confirm that next year’s planned increase in corporation tax will be cancelled.”