Kwarteng’s tax-cutting programme ‘not a gamble, it’s a necessity’, says minister

 (PRU/AFP via Getty Images)
(PRU/AFP via Getty Images)

Kwasi Kwarteng’s tax-cutting programme has been defended by a Treasury minister.

Speaking on Saturday following the Chancellor’s raft of tax cuts, Chief Secretary to the Treasury Chris Philp said Mr Kwarteng's tax-cutting programme is "not a gamble, it's a necessity".

Despite causing the pound to plummet against the dollar, Mr Philp claimed the UK “can’t continue having high taxes”.

He told Times Radio: “We can’t accept lower growth than we would like because the people in this country want higher wages.

“They want better standards of living, they want to see money invested in public services, they want to see investment, they want to see their children having a better future than they do.

“If we are going to deliver those aspirations, which we do want to do, the only way to do that is through a growth plan.

“So, it’s not a gamble, it’s a necessity.”

On Friday, the Chancellor announced a so-called mini budget where he removed the 45 per cent tax band, the cap on banker bonuses and stopped the planned corporation tax rise from 25 per cent to 19.

Mr Kwarteng also removed the National Insurance increase, adding: “We cannot have a tax system where you are getting a 70-year high, so the last time we had tax rates at this level before my tax cuts was actually before Her late Majesty had acceded to the throne.

“That was completely unsustainable and that’s why I’m delighted to have been able to reduce taxes across the piece this morning.”

The Resolution Foundation think tank said the Chancellor’s measures would involve an extra £411 billion of borrowing over the next five years.

It said the tax cuts do very little to boost the incomes of those who need it the most, pointing out that someone earning £1 million a year would gain more than £55,220 a year, while someone on £20,000 would gain only £157.

Also on Friday the pound to plummeted to levels not seen since in decades and now stands at £1 to $1.09 at the time of writing.

Larry Summers, a former US Treasury secretary, even warned sterling may sink past parity with the dollar.

“It makes me very sorry to say, but I think the UK is behaving a bit like an emerging market turning itself into a submerging market,” he told Bloomberg.