The removal of the top rate was one of the 'rabbits' unveiled by Chancellor in his mini-Budget last Friday and is being blamed as the cause of the financial markets being 'spooked'...
Music in Video: • Cello Lines
The i
2022-09-28T19:36:42Z
The removal of the 45p rate - a £2bn tax cut for more than 600,000 people earning over £150,000 - was one of the “rabbits” unveiled by the Chancellor in his mini-Budget last Friday and is being blamed by some MPs and economists as the cause of the financial markets being “spooked”.
The policy was not mentioned by Liz Truss during her leadership campaign, and is understood to have been added to the mini-Budget plans as late as the weekend of 17-18 September, just days before Mr Kwarteng’s Commons statement.
There is also unease at the way the policy was rushed through - contributing to the undermining of the Government’s economic credibility, including the record fall in the pound and an increase in the cost of government borrowing.
The Prime Minister and Chancellor are expected to come under pressure from inside Cabinet to rethink the 45p policy - although sources close to both have insisted there will be no U-turns on the fiscal package.
Even though the policy only costs only £2bn, it was the surprise element that triggered uncertainty in financial markets.
Unease over the 45p cut has also spread to the Tory backbenches.
Robert Largan, the Tory MP for High Peak, tweeted that the policy was not “the right decision when the Government’s fiscal room for manoeuvre is so limited. In my view, this is a mistake”.
Julian Jessop, one of the Prime Minister’s favourite economists, told Radio 4’s
At the same time, Secretaries of State are being asked to “identify spending efficiencies” in their departments, raising the prospect of more tensions inside Cabinet.
A Whitehall source said the Chief Secretary to the Treasury, Chris Philp, will write to Cabinet ministers asking them to “live within” the current spending review and “reprioritise” their spending - despite their budgets already being squeezed by high inflation.
But sources insisted that departmental budgets are not exposed to the headline CPI rate of inflation in the same way consumers are, which means that even with 10 per cent inflation, Whitehall spending would be growing in real terms.
27 сен 2022
