London Daily

Focus on the big picture.
Wednesday, Oct 28, 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
Aberdeen City Council Co-Leader Faces Binding Vote Challenge as Local Councillors Launch High Court Legal Battle
Housebuilding Across Scotland Falls to Eleven-Year Low Despite Government Declarations of a Housing Emergency
Former Prime Minister Gordon Brown Organizes National Innovation Summit in Manchester to Boost Regional Competitiveness
UK Government Faces Mounting Criticism Over Lack of Environmental Consultation During Artificial Intelligence Datacentre Expansion Talks
Greggs Announces Closure of Four Major Manufacturing Facilities Across Britain Resulting in Seven Hundred Forty Job Losses
British Retail Consortium Warns That Cumulative Employment and Regulatory Costs Threaten High Street Price Stability
Lloyds Banking Group Chief Executive Charlie Nunn Warns That Increased Bank Taxes Could Deter Long-Term Economic Investment
Ipsos Polling Reveals Seven in Ten Britons Expect Personal Tax Increases Amid Deep Public Economic Pessimism
Chancellor John Healey Delivers First Autumn Budget in Parliament Amid Tight Fiscal Constraints and Slower Growth Forecasts
United Kingdom Finance Monthly Review Highlights Rising Long-Term Borrowing Costs and Persistent Energy Price Pressures Across British Markets
Royal Marines Pioneer Rapid Autonomous Drone Operations During Major High North Exercise Involving NATO Allies
House of Commons Justice Committee Urges Chancellor to Align Prison and Courts Reform Ambitions With Concrete Budgetary Resources
Government Investigates Rapid Artificial Intelligence Datacentre Expansion Strategy Following Scrutiny Over Power Grid Demands and Planning Backlogs
His Majesty's Inspectorate of Constabulary Warns Third-Party Supplier Breaches Threaten United Kingdom Police and Fire Service Data
Number of British Businesses in Financial Distress Reaches Highest Level in Two Decades Ahead of Fiscal Announcement
Chancellor John Healey Prepares Autumn Budget Amid Intense Market Scrutiny Over Fiscal Headroom and Spending Pressures
Education or Indoctrination? The Growing Debate Over Religious Participation in British Schools
Germany's Vanishing Shopfronts: The Silent Collapse of the Businesses That Built Its Cities
Northern Ireland Executive Reaches Agreement on Public Transport Modernization and Cross-Border Rail Infrastructure Funding
Department for Energy Security and Net Zero Approves New North Sea Carbon Capture and Storage Industrial Clusters
Office for National Statistics Reports Stabilization in Private Rental Growth Across Major English and Welsh Regional Cities
United Kingdom Automotive Manufacturing Output Rises Moderately as Electric Vehicle Assembly Lines Expand in the Midlands
Competition and Markets Authority Launches Formal Inquiry Into Cloud Computing Infrastructure and Artificial Intelligence Partnerships
Scottish Government Finalizes Emergency Budget Adjustments Following Multi-Year Public Sector Funding Shortfalls
National Health Service England Announces Major Emergency Care Overhaul to Alleviate Severe Winter Capacity Pressures
Chancellor Rachel Reeves Prepares Autumn Budget Amid Intensifying Scrutiny Over Public Spending and Fiscal Rules
Bank of England Signals Cautious Approach to Further Interest Rate Cuts as Persistent Wage Growth and Inflation Pressures Remain
Transport for London Unveils Expanded Zero-Emission Bus Fleet to Meet Capital Air Quality Targets
Higher Education Institutions Face Deepening Financial Strain Amid Declining International Student Enrolment
Automotive Industry Leaders Criticize Government Tax Policies and Urge Action on Retail Consumer Confidence
Environment Agency Issues Flood Alerts Across Scottish and English Waterways Following Heavy Rainfall
Independent Audit Highlights Persistent Security Vulnerabilities Across Legacy Government Digital Portals
Northern Ireland Political Leaders Clash Over Westminster Funding Allocations Ahead of Autumn Budget
Ethnic Minorities in England Face Significant Disparities in Routine Breast Cancer Diagnosis Rates
National Police Chiefs Report Alarming Surge in Domestic Abuse Cases Fuelled by Expanding Illegal Cocaine Market
Government Announces Two Hundred and Twenty Million Pound Pothole Funding Boost for Local Highway Authorities
China Issues Formal Warning Over Potential United Kingdom Restrictions on Chinese Electric Vehicles
British Defence Ministers Sign E5 Pact to Enhance European Military Capabilities and Industrial Cooperation Within NATO
United Kingdom Business Activity Expands at Fastest Pace in Eight Months According to S&P Global Flash Survey
Chancellor John Healey Prepares Major Devolution Package and Bank Profit Surcharge Ahead of Upcoming Autumn Budget
National Health Service Consultants in England Announce Two-Day Strike Action Scheduled for November
Major Clean-Up Under Way Across Britain Following Destruction Caused by Consecutive Storms Austen and Boelo
KEY TRENDS TO WATCH
Declassified Intelligence Files Reveal British Security Services Monitored National Health Service Founder
British Government Launches Sweeping Regulatory Crackdown on High-Risk Cosmetic Procedures
Scottish National Party Demands Ban on Using Scottish Revenues to Fund English Nuclear Energy Projects
Mayor of London Initiates Landmark Pedestrianisation of Oxford Street to Revitalise Global Retail Hub
British Judges Granted Expanded Legal Powers to Punish Convicted Killers Who Refuse to Attend Sentencing
United Kingdom Poised to Miss Reduced International Aid Spending Targets Ahead of Fiscal Review
Surging Cocaine Consumption Drives Record Drug Fatalities and Rising Crime Rates Across Britain
×