Kwarteng delivers Mini-Budget and Growth Plan – Sector Response

The Chancellor Kwasi Kwarteng has delivered his Mini-Budget and Growth Plan to parliament.

The Chancellor confirmed changes to the Welfare System around unemployment and encouraging more support for over 50’s and the unemployed back into work.

• Around 120,000 more benefit claimants will be asked to take active steps to seek more and better paid work, or face having their benefits reduced.
• Over 50s to get more support to find work, boosting economic growth.

Kwarteng looked to address Strike Action and looking at new ways to work with Unions with a Minimum Service levels to reduce or minimise striking, particularly Legislate for pay offers with Unions.

With the Growth Plan, the Chancellor announced investment zones to encourage Levelling Up across the country.

• Chancellor unveils new growth plan, tackling energy costs to bring down inflation, backing business and helping households.
• Corporation tax rise cancelled, keeping it at 19% as government sets sights on 2.5% trend rate of growth.
• Basic rate of income tax cut to 19% in April 2023 – one year earlier than planned – with 31 million people getting on average £170 more per year.
• Stamp Duty cuts will help people on all levels of the property market and lift 200,000 homebuyers every year out of paying the tax altogether.

The Chancellor today (Friday 23 September) unveiled his Growth Plan to release the huge potential in the British economy by tackling high energy costs and inflation and delivering higher productivity and wages.

The plan set the ambitious target for 2.5% trend of growth, securing sustainable funding for public services and improving living standards for everyone.

The Chancellor of the Exchequer, Kwasi Kwarteng, said: 

“Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS.

“This will not happen overnight but the tax cuts and reforms I’ve announced today – the biggest package in generations – send a clear signal that growth is our priority.

“Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots. New Investment Zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long.

“We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”

Setting out the first steps towards growth, Kwasi Kwarteng revealed a package of major cuts to Stamp Duty Land Tax, with the changes expected to increase additional residential investment, boost spending on household goods and support the hundreds of thousands of jobs in the property industry from removals companies to decorators. The nil rate band will be doubled from £125,000 to £250,000, meaning that 200,000 more people every year will be able to buy a home without paying any Stamp Duty at all.  The standard buyer in England will save £2,5000, meaning a typical family moving into a semi-detached property will save £2,500 on stamp duty and £1,150 on energy bills – and if they have a combined income of £50,000 around an additional £560 on tax. This is around £4,200 in total.

And the Government is going even further to support first time buyers, who will now pay no stamp duty up to £425,000, and increasing the value of the property on which first time buyers can claim relief, from £500,000 to £625,000. This tax cut took effect from midnight today (Friday 23 Sept 2022). The Chancellor also announced that he will further support homebuyers by increasing the disposal of surplus government land to build new homes, increasing supply.

The Chancellor also set out plans to tackle to the biggest drag on growth – the high cost of energy driven by Vladimir Putin’s invasion of Ukraine, which has driven up inflation. To tackle this the government’s Energy Price Guarantee will save the typical household £1,000 a year on their energy bill with the Energy Bill Relief Scheme halving the cost of business energy bills, reducing peak inflation by about 5 percentage points.

Also revealed today were major tax reforms to allow businesses to keep more of their own money, encouraging investment, boosting productivity and creating jobs. New measures include cancelling the planned rise in corporation tax, keeping it the lowest in the G20 at 19%, and reversing the 1.25 percentage point rise in National Insurance contributions, a change which will save 920,000 businesses almost £10,000 on average next year. The Chancellor also announced more relief for businesses by making the Annual Investment Allowance £1 million permanently, rather than letting it return to £200,000 in March 2023.  This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.

It was also confirmed that the government is in discussion with 38 local and mayoral combined authority areas in England including Tees Valley, South Yorkshire and West of England to set up Investment Zones in specific sites within their area. Each Investment Zone will offer generous, targeted and time limited tax cuts for businesses and liberalised planning rules to release more land for housing and commercial development. These will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities.

Revealing further tax reforms, Kwasi Kwarteng outlined sector specific support for pubs and hospitality, freezing alcohol duty for another year. Reforms to modernise alcohol duties will also be taken forward and the government will publish a consultation on these plans. The new measures backing business come on top of the government’s Energy Bill Relief Scheme for businesses to cap costs per unit, which will protect them from soaring energy costs this winter by providing a discount on wholesale gas and electricity prices.

The Chancellor also reiterated the important principle of people keeping more of what they earn, incentivising work and enterprise. He announced a 1p cut to the basic rate of income tax one year earlier than planned. From April 2023, the basic rate of income tax will be cut to 19% and will mean 31 million people will be better off by an average of £170 per year. Due to the combined impact of the reversal of the HSCL and the reduction of the Income Tax Basic Rate, someone working full time on the current National Living Wage will see a tax cut of over £100.

Alongside cutting the basic rate of income tax, the Chancellor also abolished the additional rate of tax, taking effect from April 2023. In its place will be a single higher rate of income tax of 40%. The policy removes the UK’s previous top rate tax, which was higher than countries like Norway, USA and Italy, and is designed to attract the best and the brightest to the UK workforce, helping businesses innovate and grow.

In a further move to grow the economy, the Chancellor announced plans to accelerate new roads, rail and energy infrastructure. In 2021 it took 65 per cent longer to get consent for major infrastructure projects than in 2012. New legislation will cut barriers and restrictions, making it quicker to plan and build new roads, speeding up the deployment of energy infrastructure like offshore wind farms and streamlining environmental assessments and regulations.

To further support businesses, the Chancellor announced new measures to unlock private investment. The Government will change regulations to increase investment by pension funds into UK assets, benefiting savers and boosting economic growth, and incentivising investment into Britain’s science and tech companies.

New measures were also announced to help people on low incomes secure more and better paid work. Universal Credit Claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their Work Coach and take active steps to increase their earnings or face having their benefits reduced. This change is expected to bring an additional 120,000 people into the more intensive work search regime.  Jobseekers over the age of 50 will also be given extra time with jobcentre work coaches, to help them return to the jobs market. Rising economic inactivity in the over 50s is contributing to shortages in the jobs market, driving up inflation and limiting growth. Returning to pre-pandemic activity rates in the over 50s could boost the level of GDP by 0.5-1 percentage points.

The majority of announcements today are UK-wide, however the Scottish Government is expected to receive more than £600 million extra funding over the 2021 Spending Review period as a result of the changes to income tax and Stamp Duty Land Tax and the Welsh Government will receive around £70 million over the same period as a result of the change to Stamp Duty Land Tax. The reversal of the Health and Social Care Levy will save 4.3 million people across Scotland, Wales and Northern Ireland more than £230 on average next year.

In the coming weeks, the Government will set out further details of plans to speed up digital infrastructure, reform business regulation, increase housing supply, improve our immigration system, make childcare cheaper, improve farming productivity and back our financial services.

See the Resolution Foundation’s Analysis here.

Sector Response

Tony Wilson, Director of the Institute for Employment Studies, said:

“There are over a million unfilled jobs in the UK, but still half a million fewer people in work than before the pandemic. The economy is creating jobs but there aren’t enough workers to fill them.  Unfortunately though, today’s budget measures will make virtually no difference to the shortages and challenges that firms are facing.  If anything, plans to force low paid part time workers to work more hours could make things worse, by forcing people to change jobs or give up work entirely.  It also misses that point that part-time work has fallen since the pandemic began while full time work is rising.  The problem for the economy and employers is that we don’t have enough workers, not that our workers don’t work enough hours.

“There are nearly two million people who are out of work, not looking for work but who want a job.  Many of them are older and health conditions, not on benefits not getting any support at all.  We need a proper plan to help people into work and to help employers fill their jobs, otherwise we’ll continue to throttle growth and fuel inflation.”

Jane Hickie, AELP Chief Executive, said:

“I welcome measures in The Growth Plan 2022 which will reduce financial pressure on the skills sector at an incredibly challenging time. Training providers will no doubt appreciate a reduction in tax burden and a freeze on the cost of energy until April 2023. However, with spiralling inflation, no long-term assurances on energy, and without further intervention around skills- I fear this plan alone will not do enough to offer confidence to the sector.

“AELP remain firm in our view that the funding available for delivering skills programmes must meet the true cost of delivery. The government should review funding bands for all programmes at least every two years. There must also be appropriate incentives in place for learners and employers to participate in skills training.

“While you can’t deliver a world class skills system on the cheap and further investment is needed, the government could make a big difference without spending much money at all- for example, by cutting bureaucracy and red tape, or effectively recycling underspend on certain programmes.

“The government must put the skills sector on sustainable footing, if they are to reach their number one priority of boosting economic growth. I look forward to further conversations with ministers and officials over the coming months on how this can be achieved”.

Geoff Barton, General Secretary of the Association of School and College Leaders, said:

“This morning, we’ve heard the Chancellor set out a ‘mini-budget’ in which the government has given away billions of pounds to promote growth, but not a penny for education, where not only is growth presumably deemed to be unimportant but so is maintaining current provision. The Chancellor states that promoting economic growth will generate money for public services. However, the crisis in our schools and colleges is happening now, and a plan which he acknowledges will not happen overnight, will not pay the bills.

“Schools and colleges face huge extra costs from national pay awards for which there is no additional funding, and energy bills, which the government’s support scheme only partially addresses. They simply do not have the money to afford these costs. Without urgent financial support from the government, it is likely that there will be deep cuts to provision and the risk of a decline in educational standards. Some schools, particularly small primaries, may no longer be financially viable. It is inevitable that we will see larger class sizes, cuts to subject options and pastoral support, school trips cancelled, extra-curricular programmes scrapped, and widespread job losses.”

Stephen Evans, chief executive of Learning and Work Institute said:

‘A focus on growth is the right policy to get our economy moving but we need an ambitious plan to improve skills and help people back to work as cutting taxes alone won’t work. The UK has seen the biggest drop in its employment rate of the major G7 economies, driven by an exodus of over-50s and people with long-term sickness from the workforce, and productivity growth has stalled at levels far below many comparator countries. This has contributed to stagnation in real wages since 2008 and challenges funding public services.

‘It’s clear we need a step change in approach that gets more people into jobs, boosts skills and expands opportunities.  This should include a plan to improve skills for young people and adults, better incentives for employers to invest in skills, ensuring everyone who wants to work can access employment support, and better joining up employment support with health services’.

Dr Mary Bousted, Joint General Secretary of the National Education Union, said:

“The Chancellor’s statement has revealed for all to see the political choices taken by this government. They are electing to starve public services of investment and cut public sector pay whilst wasting billions on tax cuts for the wealthy and lifting the cap on bankers’ bonuses. These measures will not provide the economic growth we need, and it is simply unjustified to claim that real-terms pay cuts for public sector workers are needed to keep inflation down.

“Although the rate of inflation did not increase in August, it remains at historically high levels, is set to increase again and will certainly remain well above the announced pay increases for teachers and support staff. This rocketing inflation comes after more than a decade of pay erosion, which has already seen a real-terms cut in teacher salaries of 20% since 2010, and 27% for support staff over the same period. It is simply unsustainable to deny teachers and support staff the fully funded, above-inflation pay rise they deserve, especially when the severe problems in teacher recruitment and retention are taken into account. The government routinely misses its targets for trainees, and by its own measure 40% of teachers leave within ten years of qualifying. For support staff, we are now seeing for the first time ever schools struggling to fill vacancies. 

“Clearly, this is a mess of the government’s own making – and it should come as no surprise that school leaders, teachers and support staff are poised to take action to defend their profession. Preliminary ballots are underway this month, and if supported by our members, will lead to the largest strike ballots of teachers and support staff in England and Wales for a generation. Their demand will be for a fully-funded inflation-plus pay increase.”

Ben Harrison, Director of the Work Foundation at Lancaster University, a leading think tank for improving working lives in the UK:

“Today’s mini-budget represents a big gamble – not only with the economy, but with the living standards of millions of people across the country.

“The Government is betting that substantial tax cuts focussed on business and those who are relatively well off – while putting pressure on workers getting Universal Credit to earn more money – will spur investment and growth. They are also betting that existing support for those most vulnerable to inflation and the cost of living crisis will be enough to see them through the winter.

“But the evidence is far from clear this will work. And while confirmation of the energy price freeze for employers is welcome, the fact remains nearly half of households already report they’re struggling to afford their bills.

“The Chancellor has also chosen to introduce stricter sanctions on those in low paid, part-time work, which will make this winter harder for the six million people in severely insecure jobs. Instead, Government should bring forward the planned increase in Universal Credit payments from April 2023 to reflect the rising costs people are facing right now.”

* Data on households struggling to afford their bills is from the ONS Public opinions and social trends, Great Britain: 31 August to 11 September 2022.

Zoë Billingham, director of IPPR North said:

“Today’s budget fails to address what is needed to deliver sustained economic growth which can be built & shared by all corners of the UK. It is a sugar rush budget at best. 

“There are better reasons to invest in the UK than tax cuts. Whilst the government promotes investment zones as its only offer to level up, we know they will do little more than shift economic activity between neighbours at great cost, whilst putting job quality and environmental protections at risk. 

“Instead the government needs to invest to level up, in skills, health and in the quality of our homes, whilst keeping to commitments to deliver backbone infrastructure in the North and regions like it.”

A spokesperson for Universities UK said:

“Over recent weeks we have repeatedly asked government to ensure that students are not overlooked in government measures to deal with the cost of living crisis. Tax cuts for high-earners will not benefit students struggling to manage their costs this autumn. These students include our next generation of teachers, nurses, scientists and engineers and we can’t afford to see them drop out because they can’t make ends meet. This was not addressed in today’s budget.  Universities are doing all they can, but we need the government to come back to this issue urgently with some solutions, by working with universities to boost hardship funds and increase maintenance support.”

Joshua Raymond, Director at financial brokerage XTB comments:

“After initially reacting positively to the tax announcements by the Chancellor, we’ve seen a sharp change in the pound, which is now falling sharply against the US Dollar hitting a new low of $1.11 whilst against the euro its fallen 0.6%. That means we’ve seen broad selling in the pound as opposed to mere dollar strength, which is what has shaped much of the fall in the pound this week.

The removal of the additional 45% income tax bracket was a shock and the initial reaction was one of positivity. But as investors have started to digest the fine print, especially the fact that these changes alongside the energy cap actions will cost more will be paid for by additional borrowing of a whopping £72.4bn. This, on top of the extra borrowing due to pay for the energy price caps for consumers and businesses is absolutely eye-watering and that’s why after the initial adrenaline had faded, we’ve seen investors move back to selling the pound.”   

Nicholas Hyett, Investment Analyst at Wealth Club

“In what is probably the most pro-business budget this century, the Chancellor has acted to support Britain’s “unbounded entrepreneurial drive”.

Confirmation that the VCT and EIS schemes will continue, a long overdue extension to the SEIS scheme and initiatives to unlock money from the UK’s pension schemes all provide fuel to support an entrepreneurial fire that is already burning bright. Small innovative businesses are key to the government’s 2.5% economic growth target, and creating the high value jobs that will drive wealth creation more broadly.

There is still plenty of work to do, with the government planning radical supply side reform as well as dramatic changes to the tax system. Those are no easy tasks, but the government clearly recognises the importance of a thriving private sector and the crucial role entrepreneurs play in building a successful economic future.”

TUC General Secretary Frances O’Grady said:

“This budget is Robin Hood in reverse. We should be rewarding work, not wealth. But at the first opportunity, Liz Truss is holding down wages and lining the pockets of big corporations and City bankers. The party of pay cuts strikes again.

“We need a very different plan in the full autumn budget to do right by workers. The Chancellor should boost the minimum wage, universal credit and pensions before winter sets in. He should fund pay rises in the public sector that keep up with prices. And ministers should extend collective pay bargaining rights across the economy so that whatever your job, you can negotiate a fair pay rise.”

On restrictions on the right to strike, she added:

“Nobody takes the decision to strike lightly. But the right to strike to defend pay and conditions is a fundamental British freedom. And it’s the last line of defence against employers who refuse to negotiate fair pay. These new restrictions are unworkable, very likely illegal and designed to hold down pay across the economy.”

On support with energy costs and the government’s rejection of calls for a higher windfall tax, she added:

“Ministers are letting oil and gas giants use Britain like a cash machine with no withdrawal limit. We need a much higher windfall tax on greedy energy companies to protect families from profiteering. That could fund free home improvements so that families don’t lose money by leaking heat from their homes.”

The TUC’s submission to the Treasury in advance of today’s mini budget called for the following actions:

• Bring forward inflation proof increases in the minimum wage, universal credit and pensions to Octoberto help families through the cost-of-living emergency. 
• Get the minimum wage on a path to £15 an hour as soon as possible.
• Give public service staff a real-terms pay rise that at least matches the rising cost of living and begins to restore earnings lost over the last decade.
• Strengthen and extend collective bargaining across the economy, including introducing fair pay agreements to set minimum pay across whole sectors.
• Impose a larger windfall tax on oil and gas companies that that are profiteering from UK families.
• Make sure everyone pays their fair share of taxes by going ahead with increases in corporate tax, and equalising capital gains tax rates with income tax as a first step to fair taxes on wealth.

Adriana Carpenter, CFO at Emburse:

“The energy price cap for households announced in the mini budget will hopefully ease cost of living anxieties for workers, as we have seen a growing concern – particularly amongst younger employees – about rising energy costs. In a recent survey conducted by Emburse, almost a quarter of those under 35 are considering abandoning working from home due to soaring energy prices. Additionally, 69% of respondents said their employers do not plan on providing additional financial support related to energy costs, which goes to show businesses had their hands tied amid ongoing economic uncertainties.

“However, following the government’s announcement on Wednesday, outlining energy caps for businesses starting from 1st October to weather the winter storm, organisations can hopefully breathe a sigh of relief. Going forward, businesses can support workers and keep their offices open for those looking to cut back on rising utility costs. The financial benefit of this paired with reversing cultural deficits and the benefits of collaboration will enhance the employee experience and could provide further interest in the return of the office.”

Rebecca McDonald, Chief Economist at the Joseph Rowntree Foundation said:

“This is a budget that has wilfully ignored families struggling through a cost of living emergency and instead targeted its action at the richest. It leaves those on the lowest incomes out in the cold with no extra help to get them through the winter.

“Families on low incomes can’t wait for the promised benefits of economic growth to trickle down into their pockets. The energy price cap fixes bills at a level already unaffordable for many and was never going to be enough to solve the problem for those on the lowest incomes. With food prices rising more sharply than inflation, and no action today, it will be a bitter winter ahead.

“The Government says it is on the side of the British people but it has clearly chosen to turn its back on millions who are on the lowest incomes.  

“The Government should have combined its decision to put money into the pockets of high earners with a decision to uprate benefits early. As it is, those on the lowest incomes will have run out of options this winter – forced to cut back on food and energy, go into debt and into arrears.

“The Government may have an economic theory, but today it has proven it has no understanding of the economic reality facing millions across the UK.”

WorldSkills UK said delivering world-class skills in all parts of the UK was vital if the government was to achieve its plans for growth.

CEO of WorldSkills UK Dr Neil Bentley-Gockmann OBE said:

“WorldSkills UK welcomes the Chancellor’s unrelenting focus on growth and to make the UK one of the most competitive economies in the world.

“High-quality technical education and apprenticeships help UK firms attract inward investment, in turn creating the high-value jobs that will be vital in achieving the Government’s objectives.  

“We are already working hard with our partners to bring international best practice in skills back to the UK to help level up the economy. We will continue to work with all regions and nations supporting the new investment zones and helping deliver the world-class skills needed to drive growth across the UK.

“As Team UK showcases its skills across the world this autumn, we will be gathering insights on cutting edge skills, such as industrial electronics and cyber security, to help make our technical education world-class and show the world that the UK is the place to invest.”

Tony Danker, CBI Director-General, said:  

“This is a turning point for our economy. Like Covid, the energy crisis has meant Government has had to spend massively to protect people and businesses. That means we have no choice but to go for growth to afford it. 

“Today is day one of a new UK growth approach. We must now use this opportunity to make it count and bring growth to every corner of the UK. Fifteen years of anaemic growth cannot be repeated.  

“Taking action to get Britain’s economy moving again by beginning construction on transport and green infrastructure projects shows immediate delivery. Planning reform is long overdue. A simpler, smarter approach to tax can pay dividends, and firms will be keen to make the most of the investment incentives on offer.  

“It’s not perfect – it’s just the beginning – but there’s plenty business can work with. The Chancellor signalled more proposals to come this Autumn and these will be vital to sustain momentum on growth.” 

The Social Market Foundation’s response to the mini-Budget 2022 follows below.

On the energy bill relief package – Amy Norman, Senior Researcher at the Social Market Foundation, said:

“The Energy Price Guarantee is both necessary and welcome support for households facing rising energy bills over the coming months and years. The scale of this intervention means that the amount of energy people use is no longer just a private matter, but now one of fiscal responsibility. With every unit of energy consumed now costing the taxpayer, to the tune of £31 billion in just its first year, it is regrettable that the Government has done nothing to encourage demand reduction that could save families and the government money.

“This winter, 19 million households will be using more energy than they reasonably need to due to drafty, leaky roofs, walls and windows. The Chancellor missed a prime opportunity today to announce a national mission for demand reduction to give households advice on reducing unnecessary waste and increasing their efficiency. The pandemic has taught us that people are willing to do the right thing to help the more vulnerable members of society – when they’re given the correct guidance. It is a pity that a short-sighted refusal to do anything that might be seen as telling people what to do has got in the way of building a cheaper and more secure system”.

On the overall economic outlook of the Budget – Scott Corfe, Research Director at Social Market Foundation, said:

“The Chancellor is making a very high-risk gamble with the economy. If his package of enormous tax cuts and ‘supply side reforms’ fails to translate into significantly higher economic growth, we risk further falls in the pound and surging gilt yields as investors lose confidence in our ability to pay our way in the world. That in turn means higher inflation, an unsustainable trajectory for the public finances and steeper interest rate rises – potentially deepening rather than alleviating the cost of living crisis.”

On Corporation Tax and long-term growth plans – Richard Hyde, Senior Researcher at the Social Market Foundation, said:

“A higher rate of trend growth is a good ambition, but it’s not clear that tax cuts are the best way to deliver it. The evidence of previous cuts in Corporation Tax is that they don’t reliably lead to increases in business investment.

“The best way to increase the long-term productive capacity of the UK economy is to increase the number of highly skilled people working in it. That means investing more in education, skills, and training. The worry for the UK’s long-term prospects is that that the ongoing fiscal costs of today’s announcements will severely constrain government’s ability to support productivity growth for British workers.

“The long-term risk here is that in years to come, ministers struggling to pay the debt interest on a mountain of public debt and fund an increasingly expensive health and care system will find they have less money for schools and skills.”

On benefits changes and labour supply – James Kirkup, Director of the Social Market Foundation, said:

“Ministers are right that the UK economy needs to get more people working more hours: labour shortages are a constraint on growth. But by making Universal Credit less generous, they are aiming at the wrong target.  The real story of the tight labour market is not welfare claimants working too little. It’s around 1 million people becoming economically inactive since the pandemic. Benefits reform won’t do anything to encourage them back into work, but it may make life worse for workers on low wages.   

“A better approach would have been to leave Universal Credit alone and focus on supporting the economically inactive to come back to work. The focus should be on supporting the long-term sick and those who have forced to stop work in order to care for children or elderly relatives.  

“Getting economically inactive people back to work should be an economic and social priority. Penalising working welfare claimants should not.”

On stamp duty tax – Scott Corfe, Research Director of the Social Market Foundation said:

“Stamp duty is a bad tax – it discourages housing transactions and reduces the number of homes put up for sale each year. In this sense, today’s permanent increase in the stamp duty threshold is welcome.

However, a stamp duty cut should have been complemented with reform of ongoing property taxes, such as Council Tax, to ensure that wealthy households pay a fairer share of taxation.

Moreover, with mortgage interest rates rising and these reforms eroding the tax advantage enjoyed by first-time buyers, the risk is that the financial gains of those that already own their homes will be entrenched, making it even harder for others to get onto the property ladder.”

Rebecca Evans, Minister for Finance and Local Government, said:

“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.”

Neil Carberry, REC CEO said:

“Putting business at the heart of delivering prosperity for the UK is always the right call, and the Chancellor’s focus on this will have landed well with employers all over the country. Reducing the counter-productive rise in employer National Insurance – a tax on creating jobs and paying people more, that falls heavily on the sectors most affected by the pandemic – is wise. And ditching the botched changes to IR35 – the rules on how temporary contractors are paid – is also a huge help. These have been big REC campaigns, and we welcome today’s announcements. The changes will provide many businesses with much needed relief, when taken into the balance with short-term support on energy bills.

“It is not enough to simply tear things down though – we also need to build. On IR35, retained European regulation, investment zones and infrastructure there is hard work to do on replacement rules, and in some cases little time to do it. Business is ready to help – but we will need action from Government to make things happen. Nowhere is this truer than on skills, where the failure to reform the failed Apprenticeship Levy continues to hold back employer training investment. Reforming the Working Time Directive allows us the opportunity to preserve rights on holidays, breaks and working weeks while removing the administrative nightmare faced by firms in calculating how they comply with the current rules, which were not designed for today’s economy. But we need to move quickly to do this, given the chaos that has been created by some recent court judgements.

“Tackling rising economic inactivity is a key part of ensuring the UK can grow.  But it is a complex issue. REC members remain unconvinced that benefit sanctions can do the job – there is no point forcing someone to an interview they are unprepared for. We are similarly sceptical about further regulating the process of employers negotiating with trade unions in workplaces, as this could lengthen disputes even more. We need a better workforce plan than that – and recruiters are ready to help deliver one.  And that workforce plan needs to sit alongside a fiscal plan that the markets can believe in. Over the next few weeks, we will be looking for the Government to set out it’s approach to ensuring that the books can be balanced, recalling that public services matter. So much of our inactivity issue is driven by long-term sickness that requires a strong NHS for it to be resolved.”

Anthony Painter, CMI’s Director of Policy, said: 

“Four out of five managers believe the UK is already in recession. The majority of businesses already have plans in place to respond to the economic downturn. They have also seen growing anxiety from staff about energy costs. So the focus on growth in today’s statement is welcome – especially support for business and household energy costs.

“Risks from inflation and the UK’s external position have been identified in the short-term and this will need very careful attention from both the Government and Bank of England. The long-term growth plan needs fleshing out and there was plenty to support longer term growth today including improving planning, investing in infrastructure, and support for investment in the industries of the future. Surely the plan must include investment in high level technical and management skills as part of the mix- we know that is a key ingredient for sustained growth.”  

Dr Joe Marshall, Chief Executive of the NCUB, said:

“The opening sections of the Growth Plan rightly identify the UK’s world-leading universities as a structural economic strength. Innovation is built up from a foundation of ideas and knowledge generated through researchand people. Beyond our tax and regulatory frameworks, our highly skilled people and knowledge-intensive institutions attract global investment. Universities play a critical role in this.”

Marshall continued: “However, whilst the strength of our university sector must be leveraged, it must also not be assumed. Strategic public investment in education, research and collaborationis essential.UK public spending on research lags behind competitors, and universities are facing significant inflationary pressures on their finances. The Government must be bold and ambitious in its plans to invest in its strengths so they can be relied upon to underpin long-term growth. This requires setting out a clear and long-term plan to bring public research spending in line with our competitors, and to ensure fair and sustainable funding for higher education thatwill help to deliver the entrepreneurial and innovative workforce needed by theUK economy.” 

Paul Whiteman general secretary of school leaders’ union NAHT, said:

“The Government’s ‘mini budget’ is incredibly disappointing. It is a squandered opportunity to address the chronic underfunding in education and wider public services. It will seem bemusing to many people in this country who see public services stretched to breaking point. To them, today’s announcement will seem very distant from reality.”

On the announcement that the government will legislate new rules for trade unions, Mr Whiteman said: “The proposed legislation to further restrict workers rights is needless and unnecessary. Trade Unions are already subject to stringent laws. Government should be focused on resolving the issues that cause dissatisfaction amongst workers rather than removing their ability to object.”

Torsten Bell, Chief Executive at the Resolution Foundation, said:

“This may not have been a Budget, but the Chancellor has certainly blown the budget with the biggest package of tax cuts announced since the ill-fated Barber Budget of 1972. His decision to combine the largely unavoidable higher deficit caused by rising energy prices and interest rates with permanent tax cuts will drive up borrowing by over £400 billion in the coming years. No Chancellor has ever chosen to permanently increase borrowing by so much.

“Without significant cuts to public spending, debt will be on course to rise in each and every year. This is not what sustainable public finances look like. Every scrap of Treasury orthodoxy has been torn up.

“While the Energy Price Guarantee will do an excellent job of softening the living standards squeeze this winter for rich and poor households alike, today’s tax cuts will do little to boost the incomes of those on low and middle incomes. Someone on an income of £1 million will receive a tax cut worth £55,220 next year.

“This borrowing surge will mean higher GDP this winter, but it will also mean higher interest rates as the Bank of England aims to suck out the boost to demand the Chancellor has provided. Even those who believe lower taxes will make a major difference to growth should be cautious about putting all their eggs in that basket. After all, the tax take will remain at levels not sustained since the 1940s – even on these plans.”

NUS VP Higher Education, Chloe Field said:

“The new Chancellor had a chance today to prove that he’s willing to support students and to invest in the future of the UK. He sadly decided to prioritise the needs of the 1% instead of those who need support the most, once again ignoring students who are struggling to afford the bare necessities, to feed their families and get to university and college”

OFF-PAYROLL WORKING RULES (IR35) – sector reactions

Andy Chamberlain, Director of Policy at IPSE said:

“We are delighted that the new Chancellor agrees with what we have been saying for years – that the 2017 and 2021 reforms create unnecessary complexity for contractors and businesses. It is with huge relief that we welcome this dramatic shift in government thinking”

“As delighted as we are with the news, we remain concerned that the underlying IR35 rules will stay in place, and we hope to work with the government to make further progress on this issue in the weeks and months ahead.

“But for now, this is a watershed moment and will be a tremendous boost to thousands of contractors who have been unfairly penalised by these damaging rules.”

Emma Jones CBE, founder of Enterprise Nation, said:

“Thanks to the removal of IR35, many experienced individuals that left the employment market will now return.”

SEED ENTERPRISE INVESTMENT SCHEME

Dom Hallas, Executive Director, Coalition for a Digital Economy (Coadec) said:

“Startups will be cheering the planned increases to the Seed Enterprise Investment Scheme (SEIS) and long-term commitment to other schemes including the Enterprise Investment Scheme (EIS) . Along with changes to pension funds and more capital through the British Business Bank. It’s a strong signal that the government wants growth – and that growth will come from UK tech startups.”

Irene Graham OBE, CEO, ScaleUp Institute said:

“We welcome the Government’s Growth Plan which puts scaling up at its centre. Since its inception, the ScaleUp Institute has highlighted the importance of long-term patient capital, investment and access to skilled talent as critical to the scaleup economy. The pension cap reforms and proposed Long-term Investment for Technology & Science (LIFTS) initiative are vital steps forward , alongside the expansion of the Seed Enterprise Investment Scheme (SEIS) and continuing support for the EIS and VCTs. These initiatives will unleash greater flows of capital into scaleup companies who are key drivers of our future economic growth. We will continue to work with the Government as these evolve.”

Priya Lakhani OBE, Founder CEO of CENTURY Tech said:

“The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) have been instrumental in encouraging investment and innovation in startups and scale up technology companies in the UK. The expansion of SEIS is a win for UK entrepreneurship and the commitment by the Chancellor to continue look at ways of expanding these schemes is most welcome.”

Romi Savova, PensionBee CEO, said: 

“By guaranteeing the future of the Enterprise Investment Scheme (EIS) and expanding the parameters of the Seed Enterprise Investment Scheme (SEIS), the Chancellor has given UK startups a major boost. 

“As an integral part of the UK’s early-stage funding landscape, these schemes have greatly supported many new technology companies, including PensionBee prior to our IPO in 2021. 

“Due to the increase in the generosity and availability of these schemes, I hope to see SEIS and EIS investments continue to support the most innovative young businesses in the UK.”