A taxing issue for Scotland to deal withpublished at 11:11 British Summer Time 23 September 2022

11:11 BST 23 September 2022

Douglas Fraser
Scotland business & economy editor

Several of the chancellor's measures will affect Scots, including the reversal of April's National Insurance increase for employers and employees, and retention of the corporation tax rate.

Scotch whisky distillers and brewers will welcome an end to planned reforms of alcohol duty. Reversal of tax reforms for self-employed people will also cover the whole UK.

But big elements will not apply in Scotland, including the cut in additional rate income tax from 45% to 40% on earnings above £150,000. The rate in Scotland remains at 46%.

A cut in basic rate tax from 20p in the pound to 19p does not apply in Scotland as the basic rate has different thresholds for Scottish taxpayers, external.

What the mini-budget means for Scotland

The founder of Money Saving Expert, Martin Lewis, has described Chancellor Kwasi Kwarteng's statement as "staggering".

"That really was quite a staggering statement from a Conservative party government," he wrote in a tweet., external

"Huge new borrowing at the same time as cutting.

"It's all aimed at growing the economy. I really hope it works. I really worry what happens if it doesn't."

We’re hearing more reaction now.

The Royal College of Nursing (RCN) union is urging its members to vote for strike action on foot of the chancellor’s statement.

RCN general secretary and chief executive Pat Cullen says the decision to cut the cap on bankers’ bonuses shows the government is focusing on “the wrong priorities”.

“Nursing will be dismayed by the decision to prioritise well-off bankers over NHS and social care staff, some of whom are using food banks and live on a financial knife-edge,” she says.

“Ministers have taken advantage of the goodwill of nursing staff for far too long, and we’re urging our members to vote in favour of strike action when our ballot opens on 6 October."

Dharshini David
Global trade correspondent

There will be £45bn in tax cuts by 2027 but much of that - national insurance cuts, the abolition of the cap on bonuses and the highest rate of income tax - is explicitly and unapologetically channelled towards higher earners in an echo of the Thatcher years.

How much exactly the better-off will gain is not clear yet.

Liz Truss has boldly declared it is fair to cut taxes in this way because it will ultimately benefit the whole of society.

The Treasury has been coy, shying away from publishing its usual set of charts showing how different earners will be affected. But we know, for example, the richest 10% of society will gain 60 times as much from the National Insurance cuts as the poorest 10%.

It's a marked difference from the policy of recent years in which the government focussed more on redistributing income.

And past experience suggests those further down the income scale may not benefit; the outcome could be greater inequality.

Let's hear from a Northern Ireland representative now, with the DUP's Sammy Wilson up in the Commons.

He seems to praise the Chancellor's announcements, saying they'll increase economic growth in the UK, increase the standard of living, increase employment, help to raise revenue for public services and reduce the national debt.

But he goes on, drawing attention to the fact Kwasi Kwarteng's newly-announced investment zones don't include locations in Northern Ireland.

"I only hope that the Brexit freedoms he's talking about, once we are free of the Northern Ireland Protocol, will lead to investment zones and regulatory reform in Northern Ireland," he says.

Kwarteng says the government is eager to engage with Northern Ireland on all the issues Wilson has mentioned.

Liberal Democrat Sarah Olney asks how the Conservatives' focus on growing the economy will help families with day-to-day issues.

How will it help them, for instance, get a GP appointment and make streets safer?

Kwasi Kwarteng replies bluntly, saying:

In the House of Commons, Alison Thewlis of the SNP says the chancellor's new announcements are "a plan for recession" and "almost inevitable public sector cuts".

"Actively choosing to permanently cut taxes, and spend eye-watering sums to patch up a failed energy market, while inflations soars, interest rates are hiked, and recession looms, will not create growth, it will create economic chaos," she says.

Nothing he has said today will provide any reassurance to families struggling to get by in "broken Britain", she adds.

In response, Chancellor Kwasi Kwarteng says he's surprised that she mentions energy - but hasn't acknowledged the government's action on capping bills.

He then praises UK PM Liz Truss once again, saying she brought in the £2,500 energy cap "just two days into her role".

Nick Eardley
Chief political correspondent

This is not a mini-budget. This is a big tax-cutting moment for the economy.

Incomes tax is being slashed for those on the highest incomes. Stamp Duty has been cut in England and Northern Ireland. Rises in National Insurance have been reversed, corporation tax increases won’t happen.

This will cost of lot of money. The Treasury reckons the tax cuts will amount to a £45billion cut by 2026/27.

Add in the cost of energy support – £60bn for the first six months according to today’s estimates.

The chancellor's calculation is that massive increases in borrowing are worth it. People need help with bills and slashing tax will stimulate growth.

But many are sceptical it will work. And if it does, it won't happen overnight.

In case you missed it, the changes to stamp duty in England and Northern Ireland are "effective from today" says chancellor Kwasi Kwarteng.

He said: "In the current system, there is no stamp duty to pay on the first £125,000 of a property’s value. We are doubling that to £250,000.

"First-time buyers currently pay no stamp duty on the first £300,000. We’re increasing that threshold as well, to £425,000.

"And we’re going to increase the value of the property on which first time buyers can claim relief, from £500,000 to £625,000."

He added: This is a permanent cut to stamp duty, effective from today."

- The basic rate of income tax will be cut by 1p to 19p from April 2023

- The 45p tax rate for top earners over £150,000 will be abolished, also from April next year

- The level at which house-buyers begin to pay stamp duty in England and Northern Ireland is doubled from £125,000 to £250,000

- First-time buyers will pay no stamp duty on homes worth £450,000, up from £300,000

- Planned rise on corporation tax from 19% to 25% is scrapped

- A 1.25% rise in National Insurance to be reversed from 6 Novemnber

- Cap on bankers' bonuses, which limited rewards to twice the salary level, is axed

- Cost of subsidising both domestic and business energy bills will cost £60bn for the next six months

-Strike action: unions will be required to put offers to members during pay talks

- UK to introduce sales tax-free shopping for overseas visitors

Dharshini David
Global trade correspondent

This chancellor says he’d like to accelerate the UK economy so that it expands by an average of 2.5%.

Kwasi Kwarteng is not the first chancellor to say that but few, especially in the post financial-crisis world, have achieved it.

Shaking-up the UK's "supply side" such as reforms to regulations and streamlining systems, boosting investment and increasing incentives to innovate, can significantly boost prospects by making us more productive.

The issue, Treasury veterans note, is those type of measures can take decades to bear fruit, they’re no quick fix.

And the next election is just two years away.

Launching into his defence to Labour, Kwasi Kwarteng tells shadow chancellor Rachel Reeves her claim that Labour can achieve growth doesn't add up.

"You cannot grow the economy if you keep taxing families," the chancellor tells Reeves.

"You cannot grow the economy if you see business as the energy," he goes on.

Kwarteng then says the government wants to make it "very clear to our friends on the opposite benches" that "we can't tax our way to prosperity" - echoing a phrase PM Liz Truss used in her campaign many times.

Reeves denounces the government's move to stop any independent forecasts from being published prior to the fiscal statement.

"It is unprecedented to have a fiscal statement of this scale with no independent forecasts from the office of budget responsibility," Reeves states.

"Never has as government borrowed so much, and explained so little," Reeves says.

"Economic institutions matter, yet this government has undermined the Bank of England, sacked the respected permanent secretary at the treasury, and silenced the office for budget responsibility.

"This is no way to build confidence, this is no way to build economic growth."

It'll take much more than a stamp duty cut to get our country back on track - "and home ownership back to the levels last seen under a Labour government," Rachel Reeves says.

She says stamp duty changes have been tried before. "Last time the government did it, a third of the people who benefited bought a second home or a buy to let property," she claims, before asking:

More now from Shadow Chancellor Rachel Reeves.

Reeves says Kwarteng's measures are a statement of 12 years of economic failure.

"Here we are, one last throw of the dice, one last claim that these ministers will be different," she adds.

Prime Minister Liz Truss has been there throughout the past decade and has defended every economic decision, Reeves says.

"When she says she wants to break free from the past, she means to say she wants to break free from her own failed record," she adds.

Reeves says "the only thing going up" is inflation, interest rates, bankers' bonuses and borrowing.

"The chancellor has made clear who his priorities are," Labour's Reeves says.

"A plan to reward the already wealthy," she says. "Back to the future, not a brave new era."

Image source, UK Parliament

The argument peddled by the chancellor today isn't anything new, Rachel Reeves says.

"It's all based on an outdated ideology that says 'if we reward those who are already wealthy, the whole of society will benefit'."

They've decided to place levelling up with trickling down economics, Labour's shadow chancellor says of the Tories.

"As [US] President Biden said this week," she says, "'he is sick and tired of trickle down economics'. And he is right to be. It is discredited, it is inadequate, and it will not release the wave of investment that we need."

Rachel Reeves, Labour's shadow chancellor, says the mini-budget is a "comprehensive demolition" of the Tories' last 12 years in power, from a Tory chancellor.

"The costs of the energy price cap will be funded by borrowing, leaving eye-watering windfall profits of the energy giants untaxed," she says, adding that "working people are left to pick up the bill".

"Borrowing higher than it needs to be, just as interest rates rise. And yet the chancellor refuses to allow independent economic forecasts to be published, which would show the impact of this borrowing on our public finances, on growth, and on inflation. It is a budget without figures, a menu without prices.

"What has the chancellor got to hide?"

The chancellor wraps up his statement, saying Britain has indulged in a fight over redistribution for too long.

The government's focus is on making Britain more globally competitive, he says.

“We promised a new approach for a new era, we promised to release the potential of this country”, he adds.