London Daily

Focus on the big picture.
Monday, Aug 24, 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
Prime Minister Andy Burnham to Give Ukraine Classified Storm Shadow Blueprints for Domestic Missile Production
UK Graduate Job Vacancies Plunge 45% to Lowest Levels on Record
Iranian Hackers Shut Down British Power Plant for Four Days in Landmark Cyber Attack
Novak Djokovic Reveals Relentless Self-Doubt and Rejects Retirement in New Documentary
Trump Imposes 50% Tariffs on Canadian Goods After Bilateral Trade Talks Collapse
First Bus Bars Unaccompanied Under-Sixteens From Evening Services in Stoke-on-Trent
Lithium-Ion Battery Fires Cost UK Waste Sector About One Billion Pounds a Year
Reform UK Proposes Lower Social Housing Priority for Foreign-Born Naturalised Citizens
UK Government Deploys AI Drones in Crackdown on Illegal Waste Dumping
EU Biometric Border Checks Cause Disruption for British Travellers and Freight Operators
UK Expands Voluntary Drug Treatment Programme for Sex Offenders to Twenty Prisons
CrossCountry Cancels Most Services After Major Power Failure at Control Centre
Met Office Warns El Niño Could Bring Severe Autumn Storms and Higher Food Prices
Resolution Foundation Says UK Productivity Growth May Be Stronger Than Official Data Suggest
Andy Burnham Proposes Giving Regional Mayors Greater Planning Powers
UK Government Overhauls Planning Rules to Accelerate Housing Near Transport Links
Russia Withdraws Ambassador to Britain and Warns of Retaliation Over UK Drone Supplies to Ukraine
Iran-Linked Hackers Blamed for Cyberattack That Shut Down UK Power Plant
Andy Burnham Pledges UK Support for Long-Range Missile Production in Ukraine
Australia Combines Indigenous Fire Knowledge With Satellite Tech to Combat Catastrophic Wildfires
Father and Son Jailed in Scotland Over £900,000 Airport Cannabis Smuggling Operation
UK Fraud Reports Surge Sevenfold as Criminals Exploit QR Codes in Parking Meters and Phishing Emails
Brighton Thrash Aston Villa in Four-Goal Opening Half as Manchester City Trail Bournemouth
Erin Patterson Appeals Triple Murder Convictions After Hotel Mixed Sequestered Jury With Prosecution
Bank of England Maintains Close Watch on Banks Amid Global Economic Uncertainty
Warm Weather and Tourism Support UK High Street Spending During Summer
Westminster Faces Continuing Political and Administrative Fallout From Epstein Files Release
UK Invests in Domestic Defence Drone Manufacturing to Strengthen Military Supply Chains
Around Five Million UK Households Face Higher Mortgage Payments by 2028
Bluetongue Virus Cases Rise Across England, Wales and Scotland
UK Government Holds First National Day for Victims and Survivors of Terrorism
Historic Summer Droughts Threaten UK Harvests and Put Further Pressure on Food Prices
UK Economy Holds Up in Second Quarter Despite Global Energy and Geopolitical Pressures
UK Opens National Artificial Intelligence Safety Testing Facility
UK Government Finalizes Plans to Bring Remaining Regional Rail Services Into Public Ownership
Environment Agency Imposes Record Penalties on Water Companies Over Illegal Sewage Discharges
Great British Energy Announces Offshore Wind Partnership in North Sea
UK Government Tightens Planning Rules to Accelerate Housing Development
NHS Launches Digital Overhaul to Cut Elective Care Waiting Lists
Bank of England Signals Interest Rates May Stay Higher for Longer as Inflation Pressures Persist
The rise and fall of Hui Ka Yan, China’s richest man
Woke: Britain Considers Plain Packaging for Cigars as Specialist Shops Warn of Industry Collapse
Britain's Public-Service Productivity Remains Below 2019 as £80 Billion Output Gap Fuels WFH Debate
Mandelson Epstein Case in Jeopardy as U.S. Files Stay Out of Reach
Prince Harry and Six Others Ordered to Pay £9.5 Million After High Court Defeat
Bank of England Holds Interest Rate at 3.75% as Inflation and Energy Risks Persist
UK AI Security Tests Find Autonomous Agent Attempting Malicious Code Injection
UK Economy Grows 0.4% in Second Quarter Amid Global Pressures
UK Joins European Allies in Condemning Israeli Settlement Plans in West Bank E1 Area
Multiple People Killed in A66 Collision Near Middlesbrough Involving Police Vehicle
×