London Daily

Focus on the big picture.
Tuesday, Mar 31, 2026

Tax cuts: Kwasi Kwarteng's measures benefit richest, Labour says

Tax cuts: Kwasi Kwarteng's measures benefit richest, Labour says

The government's tax cuts will benefit the richest 1% and make the next generation worse off, Labour has said.

Deputy leader Angela Rayner told the BBC the chancellor's approach of "trickle-down economics" was a "dangerous gamble".

Independent think tank the Institute of Fiscal Studies said the richest 10% of households would gain the most.

But Chief Secretary to the Treasury Chris Philp said tax cuts for all would get the economy growing.

Chancellor Kwasi Kwarteng unveiled the biggest package of tax cuts in 50 years on Friday, including the scrapping of the top rate of income tax.

He also reversed the National Insurance rise from November; cut stamp duty for homebuyers; and brought forward to April a cut to the basic rate of income tax to 19p in the pound.

The measures will be paid for by a sharp rise in government borrowing amounting to tens of billions of pounds.

There was an immediate reaction in financial markets, as the pound sunk and UK stocks fell.

Speaking ahead of Labour's party conference, Ms Rayner called the plans "a very dangerous gamble on our economy and future generations".

"I don't accept the argument of trickle down economics - which is what this is - give those at the top loads more money and that will filter down to those at the bottom. That's not how it works."

She added the proposals were "grossly unfair" and would "saddle the next generation with more debt".

Arriving at the party conference in Liverpool, Labour leader Keir Starmer said the government had shown its "true colours" and the conference was "our chance to set out the alternative".

But minister Mr Philp told BBC Radio 4's Today programme: "Yesterday's tax package cut taxes for everybody across the income spectrum...

"It's a growth plan, and to get Britain growing we need to get rid of the burden of taxation. You can't tax your way to growth."

The announcements by Mr Kwarteng came after the Bank of England warned the UK may already be in a recession and raised interest rates to 2.25%.


'Betting the house'


Meanwhile, the IFS published analysis suggesting only those earning over £155,000 would see any benefits from the tax policies over the current Parliament, with the "vast majority of income tax payers paying more tax".

The think tank also said the chancellor was "betting the house" by putting government debt on an "unsustainable rising path".

IFS director Paul Johnson told BBC Breakfast: "If looked straightforwardly at people's incomes with these tax changes, the more money you have, the more you gain.

"In fact, because there was one big tax increase the chancellor didn't reverse - and that is the fall over time in the point at which you start paying income tax. If you take that into account, in three or four years' time, the only people gaining from this will be earning more than about £150,000 a year."

Responding, Mr Philp said the IFS analysis "involves speculation about what future budgets may do with the various tax thresholds".

"This wasn't a full budget - it didn't address the question of tax thresholds and I'm not going to get into speculation about what they might do in the future."

The Resolution Foundation, a think tank which focuses on those on low to middle incomes, said the package would do nothing to stop more than two million people falling below the poverty line, amid soaring living costs.

The richest 5% will see their incomes grow by 2% next year (2023-24), while the other 95% of the population will get poorer, it said.

The package will also see London and south-east England "disproportionately" better off than those living in Wales, the North East and Yorkshire, according to the think tank.

Chief executive Torsten Bell, a former Labour adviser, said: "The backdrop to yesterday's fiscal statement was an ongoing cost-of-living crisis that will mean virtually all households getting poorer next year as Britain grapples with high inflation and rising interest rates."

Elsewhere, Tony Danker, director-general of the Confederation of British Industry (CBI), told Today the measures would not "suddenly unlock growth".

"Having borrowed £150bn to support an energy package, we have to grow faster, there is no alternative."

He added: "We need a broad-based plan for growth... Action on tax is necessary but not sufficient."

On Friday Mr Kwarteng said the UK needed "a reboot", adding: "I don't think it's a gamble at all. What was a gamble, in my view, was sticking to the course we are on."



Angela Rayner: "I felt that it (the mini-budget) was casino economics"

Chief Secretary to the Treasury Chris Philp: "We are not into the politics of envy"


Newsletter

Related Articles

0:00
0:00
Close
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
UK Housing Divide Deepens as Older Owners Hold Wealth While Under-30s Face Mounting Barriers
London Demonstration Calls on UK to Recognize Iranian Opposition’s Provisional Government
UK Green Party Vote on ‘Zionism is Racism’ Motion Collapses Amid Internal Disputes and Technical Failures
SNL UK Ignites Debate with Sharp Royal Satire Targeting Prince Andrew and Prince William
EU Proposes ‘Emergency Brake’ to Resolve Deadlock in UK Youth Mobility Talks
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
UK Museums House More Than 260,000 Human Remains, New Report Reveals
Surging UK Gilt Yields Reflect Inflation Pressures and Fiscal Uncertainty
UK Issues Updated Guidance on Children’s Screen Time with Focus on Balance and Wellbeing
UK Migration Figures Show Shifting Trends Across Asylum, Visas and Channel Crossings
UK Watchdog Launches Probe into Five Firms Over Alleged Fake Reviews and Ratings
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
×