Kwasi Kwarteng has ushered in the “beginning of a new era” for the UK economy that will be dominated by tax cuts – financed by government loans – and deregulation in an unabashed pursuit of growth.
In doing so, the chancellor has trampled on not only the economic legacy of Boris Johnson and Rishi Sunak, but also the economic orthodoxy adopted by all conservative governments since 2010.
This is what he said:
1. About redistribution:
“For too long we have indulged in a struggle for redistribution in this country. Now we need to focus on growth, not just how we pay and spend taxes.
“We will not apologize for managing the economy in a way that increases prosperity and living standards. Our entire focus is on making Britain more competitive globally – not losing out to our competitors abroad. The prime minister promised that this would be a tax-reducing government.”
2. About Banker Bonuses:
“A strong UK economy has always depended on a strong financial services sector. We need global banks to create jobs here, invest here and pay taxes here in London, not in Paris, not in Frankfurt, not in New York.
“All the bonus limit did was to increase bankers’ base salaries, or stimulate activity outside of Europe. It never capped the total reward, so let’s not sit here and pretend otherwise. So we’re going from there.”
3. About the UK tax rate:
“Higher taxes on capital and labor have lowered returns on investment and work, reduced economic incentives and further stunted growth.
“This cycle has led to the tax burden expected to reach its highest level since the late 1940s – before even Her Late Majesty took the throne. We are determined to break that cycle.”
4. At “levelling”:
“We are in talks with nearly 40 places such as Tees Valley, the West Midlands, Norfolk and the West of England to establish investment zones.
“And we will work with the devolved authorities and local partners to ensure that Scotland, Wales and Northern Ireland will also benefit, if they are willing to do so.
“If we really want to rise, Mr. Chairman, we have to unleash the power of the private sector.”
5. About the abolition of the top rate:
“This will simplify the tax system and make Britain more competitive. It will reward entrepreneurship and work. It will stimulate growth. It will benefit the entire economy and the entire country.”
6. About Government Loans:
“In the context of a global energy crisis, it is entirely appropriate for the government to use our borrowing powers to fund temporary measures to support families and businesses.
“That’s what we did during the Covid-19 pandemic. A major intervention was then … and it is now. The high cost of doing nothing would have been much higher than the cost of these schemes.”
7. On ‘Barriers to Entrepreneurship’:
“There are too many barriers to doing business. We need a new approach to break them down. That means reforming the supply side of our economy.
“Over the coming weeks, my cabinet colleagues will keep the House updated on every aspect of our ambitious agenda. Those updates will cover: the planning system, company regulations, childcare, immigration, agricultural productivity and digital infrastructure.”
8. About Unions:
“At such a critical time for our economy, it is simply unacceptable for strikes to disrupt so many lives. Other European countries have Minimum Service Levels to prevent militant unions from shutting down transport networks during strikes.
“So we will do the same. And we move on. We will legislate to require unions to submit wage offers to a member vote, to ensure that strikes can only be called if negotiations have really broken down.”
9. On Investment Zones:
“To support growth across the country, we need to move forward, with targeted action in local areas.
“So today I can announce the creation of new investment zones. We will liberalize planning rules at specified agreed locations, release land and accelerate development.”
10. About Corporate Tax:
“The interests of companies are not separate from the interests of individuals and families. In fact, it is companies that employ the most people in this country. They are companies that invest in the products and services we rely on.
“Any additional tax on business is ultimately passed on to families through higher prices, lower wages or a lower return on savings. I can therefore confirm that the corporate tax increase planned for next year will be cancelled.”