Labor has accused Liz Truss’s government of “putting people’s mortgages and finances at risk” with its flurry of tax cuts and spending pledges.
Chair Keir Starmer said Friday’s mini-budget – which ministers say will help the economy emerge from the inflation crisis – is a “casino economy”.
New Chancellor Kwasi Kwarteng announced the biggest cut in tax rates in 50 years, which would cost the Treasury £45bn over the next five years.
He argues that this will boost the growth needed to break the UK’s “cycle of stagnation” by boosting wage increases, while a £60 billion support package to freeze energy bills will help families and businesses to get through this winter.
Mr Kwarteng said the reforms would be paid for mainly by increased borrowing and insisted the extra economic growth would make the debt more manageable.
However, ministers have been widely criticized – including by Tory backbenchers – for effectively preventing the Office for Budget Responsibility from publishing its analysis of the plan’s impact on UK finances.
The independent think tank Institute for Fiscal Studies (IFS) said the chancellor was not just backing a new strategy, he was backing the house.
Ahead of his party’s conference in Liverpool, Mr Starmer tweeted: “The Tory casino economy is putting the mortgages and finances of every family in the country at risk.”
Echoing his comments, Deputy Chairwoman Angela Rayner said the government’s tax cuts are a “dangerous game for our economy and for future generations”.
She told BBC Radio 4’s Today programme: “I don’t accept the trickle-down economics argument – and it is – give more money to the top and it will trickle down to the bottom. That’s not how it works.
“We’re going to incur even more debt on the next generation.”
“Trickle-down economics” is a term used by critics of policies aimed at boosting economic growth through tax cuts on the wealthiest.
Finance Secretary Chris Philp says the plan will “make Britain grow” by lowering taxes “for everyone across the income spectrum”.
Virtually all earners will have to pay less tax following the implementation of Mr Kwarteng’s reforms, with a 1p cut in the property tax rate, a drop in Social Security payments and a large reduction in stamp duty on the cheapest houses.
But the level at which workers start paying income tax is expected to fall further, while the top rate of income tax is reduced by 5p.
According to the IFS analysis, this means that in ‘three or four years’ time the only people to benefit will be making more than around £150,000 a year,’ added think-tank director Paul Johnson.
Ministers have not suggested that higher wages for high earners will literally “trickle down” to low earners, arguing that the tax cuts will make the UK more attractive to international firms looking for places to open new offices and factories.
But that aspect of the Tories’ plan has already hit a roadblock as investors have been lured into a historic collapse in sterling and Treasuries.
The pound hit a 37-year low against the dollar on Friday, while bonds – which generally track a government’s ability to repay its debts – had their worst day in decades.
Mr Philp downplayed the extent of the damage, telling Sky News: “[The reason] We do not do this for intraday movements in the FX market.’
Speaking to Times Radio, he added: “We’re going to do what’s right for the whole country. That means tax cuts for everyone, low earners but also high earners.
“We will do the right thing, we will achieve growth. And we won’t worry about the politics of envy or the optics of it.’
Labor has pledged to replace Tory reforms with “fair” policies but is yet to give details of its proposals.
Ms Rayner added: “We will lay out our tax proposals which guarantee that the cost of living for those on the lowest wages will improve, we will have sustainable growth in the future.
“We will invest in high-skilled jobs and renewable energy so that we can meet our energy needs independently.
“We will lay out our proposals for the next election, but we have made it very clear that those with the broadest shoulders should pay more.”
Get in touch with our news team by emailing us at email@example.com.
For more stories like this, Visit our news page.
Get the top news, feel-good stories, analysis and more
https://metro.co.uk/2022/09/24/tories-accused-of-gambling-peoples-finances-with-casino-economics-17441992/ Tories accused of jeopardizing people's finances with 'casino economics'