London Daily

Focus on the big picture.
Sunday, Aug 09, 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
Nvidia Turned Gaming Chips Into the Engine of the AI Boom
Advertising trick: Pepsi’s Harrier Jet Commercial Led to a $700,000 Court Fight
Jorge Messi, Lionel Messi’s Father and Longtime Agent, Dies at 68
Joe Biden’s Cancer Has Spread Beyond His Bones, Hunter Biden Says
Air Traffic Control Outage Grounded Flights Across the Midwest
Why 2027 Could Be a Strong Year for Stocks—and Why the Forecast Is Fragile
Why Markets May Look Quiet in August After Big Tech Earnings
AI’s Next Bottleneck Is Power, Not Just Nvidia Chips
Partial Solar Eclipse Expected to Draw Interest Across Southwestern UK
UK Graduate Job Postings Fall 7% as Entry-Level Opportunities Remain Scarce
UK Private Sector Returns to Growth as July Activity Reaches Highest Level Since April
UK Summer Drought and Wildfires Raise Pressure for Stronger Environmental Measures
UK Household Credit Stress Rises as Credit Card Lending Growth Hits 12.5%
London Stock Exchange Revises AIM Rules to Make Growth Capital More Accessible
NHS England to Expand Mental Health Services With 155 New and Upgraded Facilities
UK Overhauls £90 Billion Public Procurement System to Reward Domestic Jobs and Apprenticeships
Andy Burnham Holds Strong Approval as Labour Maintains Narrow Lead Over Reform UK, Opinium Finds
Royal Navy Monitored Russian Warships and Shadow Fleet Tankers for 21 Days in July
Australian Crew Evacuates Seriously Ill American From Antarctica in Midwinter Darkness
Trump’s Top General Seeks an Exit Strategy From Iran War, Report Says
Brock Lesnar Retires From Wrestling, Closing a Career of Rare Athletic Range and Lasting Controversy
Welsh First Minister Raises Independence With UK Prime Minister in First High-Level Call
UK Maintains Severe Terror Threat Level as Prevent Report Highlights Online Radicalization
YouGov Poll Shows Labour Favourability Improves as Reform UK and Greens Lose Ground
Brexit Campaigner Arron Banks Admits Hiring Private Investigator to Examine Journalist
Robert Jenrick Leaves Conservatives for Reform UK in Major Parliamentary Defection
July 2026 Was England and Wales’ Driest Month on Record, Met Office Says
UK Government Considers Public Inquiry Into Jeffrey Epstein’s UK Connections
Trump-Era Policy Shifts Test the Boundaries of U.S. Institutions
UK Drought Cuts Harvests and Raises Food-Security Fears
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
US Health Secretary: “I’m Not Afraid of Germs — I Used to Snort Cocaine Off Toilet Seats”
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Trump Keeps Hegseth at Pentagon While Leaving Door Open for DeSantis
UK Clears Paramount’s Warner Bros. Discovery Deal, but US Trial Looms
UK Prosecutors Add 38 Charges Against Andrew and Tristan Tate
Taiwan’s President Joins Wartime Command Drill as China Pressure Grows
Saudi Arabia, Turkey and Pakistan Sign Mutual-Defence Pact
Government Orders Review of Prison Release Rules After Concerns Over Grooming Gang Offenders
Rail Disruption Continues Across North-West England Amid Infrastructure Problems and Engineering Closures
UK Tax Authority Proposes Broad Changes to Rules Governing Company Distributions
UK Government Moves to Protect Standing Areas Outside Pubs From Local Restrictions
Extreme Right-Wing Referrals Under UK Prevent Programme Rise 42 Percent
EU Citizens in UK Warned That Some Residency Rights May Have Been Granted in Error
Every Monitored Body of Water in England Fails Chemical Purity Standards, Government Data Shows
UK Scientists Create First Artificial Intelligence-Designed Viruses
England Orders Primary Schools to Identify Children at Risk of Becoming Disengaged From Education or Work
Government Moves to Close Prison Release Loophole Amid Concern Over Grooming Gang Offenders
UK Economy Shows Modest Growth Despite Energy Volatility and Global Supply Pressures
×