GOSPORT MP Dame Caroline Dinenage has welcomed the news that households will be further supported with cost of living pressures over the coming months.
Her comments come as the pound plunges to an all-time low against the dollar, housebuyers face mortgage payments surging by up to £700 a month and the Bank of England prepares for further increases in interest rates to tackle rising inflation.
Newly appointed Chancellor of the Exchequer Kwasi Kwarteng announced a new Growth Plan for the UK to boost economic growth by cutting taxes for families and businesses.
The Truss government’s plan aims to “liberate” the private sector by boosting business opportunities and slashing red-tape to increase investment, skilled employment, quality infrastructure, home ownership and enterprise across the country. This puts the emphasis back on economic growth to deliver higher wages and investment.
The measure brings the total amount of cost of living support to £60 billion for the six months from October. It comes on top of the previously announced Energy Price Guarantee, that will limit household energy bills to £2,500 – still more than double the previous domestic average = cutting everyone’s energy bills by an estimated £1,400, as well as the Energy Bill Relief Scheme which will reduce wholesale energy costs for all UK businesses, charities and the public sector.
In Friday’s mini-budget, the Chancellor also announced:
- Cutting the basic rate of income tax to 19p and removing the 45p higher rate tax.
- Cutting Stamp Duty to £250,000 and for first time buyers, £425,000. In addition to this, the value of the property on which first-time buyers can claim relief, will be raised from £500,000 to £625,000. These steps will mean 200,000 more people being taken out of paying Stamp Duty altogether.
- Corporation Tax Rises will be cancelled. The rate of Corporation Tax will remain at 19%.
- More than 40 new Investment Zones, providing tax incentive and liberalising planning to provide localised support
- An 18-month transitional measure for wine duty. The government will also extend draught relief to cover smaller kegs of 20 litres and above.
Earlier last week Mr Kwarteng had announced that the planned National Insurance rise would be cancelled alongside the new Health and Social Care Levy.
Without mentioning the turmoil this week across the financial markets and predicted price rises as a result of the weakened pound, Dame Caroline said: “While the support already announced has been absolutely vital to my constituents, the unprecedented global situation demands unprecedented government action.
“It’s important to remember that tax is not simply a way to raise revenue, tax regimes across world incentivise economic behaviour and stimulate growth. This timely Growth Plan will ensure that individuals are further supported over the coming months while laying foundations for the future.
“I am particularly pleased that the government plans to extend the draught relief to cover smaller kegs of 20 litres and above to help smaller breweries. This will mean a great deal to Gosport’s microbreweries and is something I have been lobbying for.”
In announcing his mini-budget, the Chancellor had told MPs: “Growth is not as high as it should be. This has made it harder to pay for public services, requiring taxes to rise. In turn, higher taxes on capital and labour have lowered returns on investment and work, reducing economic incentives and hampering growth still further.
“We are determined to break that cycle. We need a new approach for a new era, focused on growth.
“Our aim, over the medium term, is to reach a trend rate of growth of 2.5%. And our plan is to expand the supply side of the economy through tax incentives and reform. That is how we will deliver higher wages, greater opportunities, and crucially, fund public services, now and into the future.”
However, many economists disagree with Mr Kwarteng’s analysis and Lawrence Summers, former US Secretary of the Treasury, former director of the US National Economic Council and former Chief Economist for the World Bank, says the problems facing the pound are now so dire he is surprised the International Monetary Fund has not made an announcement.
He told the independent news and data provider Pound Sterling Live today, Tuesday: “I was very pessimistic about the consequences of utterly irresponsible UK policy on Friday. But I did not expect markets to get so bad so fast.
“A strong tendency for long rates to go up as the currency goes down is a hallmark of situations where credibility has been lost.”
The yield on UK debt has soared to the extent it is now higher than that of Italy and Greece while the pound has collapsed.
And Mr Summers believes that Mr Kwarteng made a mistake over the weekend when saying further tax cuts were coming: “The first step in regaining credibility is not saying incredible things. I was surprised when the new Chancellor spoke over the weekend of the need for even more tax cuts.”
Meanwhile, lenders including Halifax, Virgin Money and the Skipton Building Society have all pulled some of their mortgage products.
More banks and building societies are expected to follow.
PICTURED: Gosport MP Dame Caroline Dinenage, whose wholehearted support for Chancellor Kwasi Kwarteng’s tax-cutting mini-budget differs from views expressed by economists.