Kwasi Kwarteng’s £45 billion tax cuts

Chancellor Kwasi Kwarteng has just announced a surprise 5p cut to the top rate of income tax and a 1p cut to the basic rate of tax. Together with stamp duty cuts and others, it will reduce tax by £45 billion by 2026-27 according to the Treasury’s analysis. The IFS says this is the biggest tax cutting event in half a century. Kwarteng confirmed that the National Insurance rise will be reversed, with the tax going down from November. Stamp duty will also be cut.

Kwarteng argues that this will put money back into the economy and kick start growth, but without an OBR forecast there is no formal assessment of the actual impact on growth. Rachel Reeves, the Shadow Chancellor, led her attack on his refusal to implement a windfall tax. She missed the bigger point: Kwarteng has just given the biggest tax cut to those earning over £150,000 – this will present an easy target for the Labour party once it works out what has just happened.