Wales reaction: Mini-budget ‘robs the poor to pay for the mega rich’

The Conservatives’ mini-budget has been labelled “a hideously out-of-touch budget designed to benefit the mega rich at the expense of ordinary citizens” and “fantasy, trickle-down economics to please the super-rich”.

Kwasi Kwarteng has abolished top rate of income tax for those earning £150,000 and lifted the cap on bankers’ bonuses in his first move as Chancellor.

A planned rise to corporation tax has also been axed and it will remain at 19%, the Chancellor has told the Commons.

Scrapping the top rate of income tax will mean that people on the highest incomes will pay the same rate as those on £50,000.

By terming it a “fiscal event” rather than a full budget, Mr Kwarteng avoided the immediate scrutiny and forecasts of the Office for Budget Responsibility.

The package enacting Liz Truss’s tax-cutting promises including reversing the national insurance rise and axing the hike to corporation tax came a day after the Bank of England warned the UK may already be in a recession.

First Minister Mark Drakeford said: “This mini-budget embeds unfairness across the UK. The UK Government should be offering meaningful support to those who need it the most.

“Instead, they’re giving tax cuts to the rich, bonuses to bankers and protecting the eye-watering profits of energy companies.”

Welsh Liberal Democrat Leader Jane Dodds MS said: “What we have seen today is gross negligence. The Conservatives are intent on a budget that robs the poor to pay for the mega rich. 

“Someone on £200,000 a year will benefit by an extra £3,000 a year meanwhile those on the breadline will continue to struggle. It is almost criminal and completely detached from reality.

“Cuts to cooperation tax, the removal of the bankers’ bonus cap and the abolishing of the top band of income tax for those earning over £150,000 will do absolutely nothing to help the average family this winter.

“The Conservatives are reheating the same policies they’ve tried for the last seven years that haven’t worked and have instead left the UK with stagnant growth, widening inequality and one of the lowest productivity rates in Europe. 

“This is the most financially irresponsible budget I have ever seen laid out and it will inevitably lead to either cuts in public services or more debt for our children and grandchildren through increased borrowing.

“We need a general election immediately to remove this irresponsible and reckless Conservative Government out of power.”

‘Fantasy economics’

Plaid Cymru’s Treasury spokesperson, Ben Lake MP said: “The Chancellor’s statement today was about supporting those on the highest incomes. Households and businesses across Wales are facing a grim winter of unaffordable bills and soaring inflation, and the Government’s response is to engage in fantasy, trickle-down economics to please the super-rich.

“As rural households are offered the paltry sum of £100 to cover their energy bills, the top rate of income tax is being abolished and the limit on bankers’ bonuses is being scrapped. That is not just morally questionable, it is economically irresponsible.

“The cap on bankers’ bonuses was introduced across the EU in the aftermath of the global financial crisis. Scrapping the cap on bonuses risks a return to the excessive risk taking that led to the 2008 financial crisis in first place, and a repeat of policies that led to misery for millions of people.

“Tax cuts for the super-rich will do absolutely nothing to drive growth in the Welsh economy. Given their refusal to invest in our infrastructure – I urge the UK Government to recognise that our government in Wales must be given the fiscal tools to unlock our economic potential ourselves. That is the only way to improve the lives of people across Wales.”

‘Aspiration and opportunity’

Welsh Conservative Shadow Minister for Finance, Peter Fox MS said: “Today shows that the UK Conservative Government has a comprehensive plan to provide a sharp boost to the economy by putting cash back into people’s pockets. Labour in Wales has the power to cut taxes in Wales but chooses not to.

“This Conservative Prime Minister is putting aspiration, opportunity and growth at the heart of the economy. Yet, Labour Ministers continue their reckless tax and waste policies, from implementing a tourism tax to wasting £100 million on more politicians in Cardiff Bay.

“Mark Drakeford needs to take a leaf out of Liz Truss’ book and take immediate action to support hard-working people and struggling businesses, stimulating the Welsh economy rather than stifling it.

“Let’s not forget that Labour admitted they didn’t know what they were doing on the economy – the Chancellor has delivered a clear plan for growth today, Labour need to follow it.”

‘Hammer blow’

Melanie Simmonds, head of Save the Children in Wales, said: “The Prime Minister said she would deliver on the cost of living crisis. Instead, the UK government has delivered tax-cuts to help the richest and a hammer-blow to low-income families. 

“The Chancellor has prioritised bankers’ bonuses over helping vulnerable children through the cost of living, whose hard-working parents face impossible choices. 

“Today’s announcements overwhelmingly benefit the wealthiest households, meanwhile almost one in three children in Wales risk going cold and hungry this winter. Growth is a welcome goal, but that growth must include investment that helps all children have a fair start in life. 

 “The last few years have been brutal on families on low-incomes: the pandemic, the removal of the £20 Universal Credit uplift, and now the cost-of-living crisis have left many at breaking point. Families we work with in Wales are deeply worried about how they will survive the winter, and what lasting impacts these crises will have on their kids.  

“In the Autumn Budget, the UK government must address the glaring omissions from this announcement and introduce a children’s cost of living package, with a £10 per week increase to the child element of Universal Credit and scrap the unfair benefit cap.”

‘Unlimited bonuses’

Rebecca Evans, the Minister for Finance and Local Government in the Welsh Government, has said the UK Government will ‘embed unfairness’ by failing to provide enough support to lower income households in the cost of living crisis.

The Minister said it was a regressive statement that failed to provide targeted, meaningful support for those struggling to pay their bills.

“Today’s announcements show the UK Government is heading in a deeply worrying direction, with misplaced priorities leading to a regressive statement that will embed unfairness across the United Kingdom.

“Instead of delivering meaningful, targeted support to those who need help the most, the Chancellor is prioritising funding for tax cuts for the rich, unlimited bonuses for bankers, and protecting the profits of big energy companies.

“Instead of increasing funding for public services in line with inflation, we get a Chancellor blithely ignoring stretched budgets as public services find their money is simply not going as far as it did before.

“Instead of a comprehensive growth plan we get a missed opportunity to invest in the future. We could have seen a bold programme of investment in new green energy, tackling rising bills and improving our energy security in the long-term to help stop this kind of crisis happening again.

“Here in Wales we have provided around £400m to help people pay essential bills, including targeted support for those with lower incomes. But the majority of key levers for support lie in the hands of the UK Government and we simply cannot afford more of the same. We cannot afford a UK Government that does not understand or care about the severe challenges people are facing.

“We were promised a statement that would ensure immediate support would be delivered, but this falls well short of what was needed.”

Pound drops

The Government also said it will legislate to require trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down, the Chancellor said.

The pound dropped to a fresh 37-year-low against the dollar as the Chancellor unveiled his “growth plan” for the UK economy.