London Daily

Focus on the big picture.
Tuesday, Jul 21, 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
EU Imposes Record €550 Million Digital Services Fine on AliExpress
UK Publishes Updated Consumption-Based Carbon Emissions Data
English Regions Prepare for Expanded Devolution and Infrastructure Powers
Russell Group Backs New Government and Calls for Stronger University-Industry Links
Bank of England Maintains Restrictive Monetary Policy Amid Persistent Inflation
Climate Progress Report Renews Debate Over the UK's Net Zero Strategy
New UK Government Launches Drive to End Rough Sleeping and Expand Social Housing
Prime Minister Andy Burnham Appoints John Healey as Chancellor in Cabinet Reshuffle
OECD Calls for Structural Reforms as UK Economy Faces Slower Growth
International Monetary Fund Expects UK Economic Growth to Slow to One Percent in 2026
Andy Burnham Takes Office as UK Prime Minister and Unveils Decade-Long Reform Agenda
London’s Housing Starts Collapse as Planning and Building Costs Stall Development
Charlie Sheen’s Daughter: "My Dad Didn’t Buy Me a House, My Breasts Bought It"
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Naturally Conceived Identical Quadruplets Born in Rare Brisbane Delivery
Tate Brothers Fight British Extradition Bid After Miami Arrests
Burnham Reshapes Britain’s Government Around Living Costs, Devolution and Security
Jingye Demands Full Compensation After Britain illegally Nationalized British Steel
Just Another Liar or a Robin Hood? Andy Burnham Pledges Cost-of-Living Help in First Speech as UK Prime Minister
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Police Block Cockroach Janta Party’s March to Parliament as Education Protests Intensify
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Turkey Explores S-400 Transfer to UAE in Bid to Rejoin F-35 Program
Josh Kerr Breaks Twenty-Seven-Year World Mile Record at London Diamond League
Thames Water Crisis Deepens as South East Water Outages Hit Thousands in Kent
EU Ban on Destroying Unsold Clothing Forces British Fashion Brands to Change Operations
UK Government Confirms Existing North Sea Oil and Gas Licences Will Be Honoured
UK Covid Inquiry Finds Nearly Ten Billion Pounds Lost in Pandemic Protective Equipment Procurement
Thames Water Moves Toward Possible Temporary Nationalisation Amid Rescue Plan Dispute
Andy Burnham Cancels One Point Eight Billion Pound Digital ID Programme After Taking Office
UK Government Takes British Steel Into Full Public Ownership to Protect Jobs and Supply Chains
Andy Burnham Becomes UK Prime Minister and Pledges Focus on Living Costs and Public Services
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Singapore Considers Lower Taxes for Fund Managers as Hong Kong Intensifies Talent Contest
US Retaliates Against Iran After Two American Troops Killed in Jordan
Bank of Asia BVI Enters Court-Supervised Liquidation After Regulators Find It Insolvent
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Iran Claims It Destroyed Bahrain’s Main Artificial Intelligence Center in Missile and Drone Strike
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Brothers Andrew and Tristan Tate Who Turned "Toxic Masculinity" Into a Brand Arrested in Miami as Britain Seeks Their Extradition
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
×