Mini-budget that gives millionaires a £55k tax cut ‘doesn’t disproportionately benefit high earners’

Nadine Batchelor-Hunt

·Political Correspondent, Yahoo News UK

Sun, 2 October 2022 at 5:16 pm

Chief Secretary to the Treasury Chris Philp leaving Millbank Tower in Westminster, London. Prime Minister Liz Truss has insisted the Government's tax-cutting measures are the
Chief secretary to the Treasury Chris Philp has claimed the government’s mini-budget does not disproportionately benefit the wealthiest. (PA)

A Treasury minister has claimed the government’s mini-budget, which handed at least £55,000 worth of tax cuts to millionaires, does not disproportionately benefit the rich.

Speaking on Sunday at the Conservative Party conference, chief secretary to the Treasury Chris Philp defended last month’s controversial budget, awarding it a “9.5 out of 10”, adding that it would stimulate economic growth.

Liz Truss and Kwasi Kwarteng announced a spree of unfunded tax cuts in their mini-budget, which sent the UK economy into turmoil amid market fears the government was being irresponsible with public finances.

Responding to the backlash, and international pressure to demonstrate how it will pay for the cuts, the government has indicated it will cut public spending – including benefits – to foot the bill.

When asked by Yahoo News UK if cutting benefits to fund tax cuts for the highest earners was a price worth paying for the government’s plan, Philp refused to answer – instead claiming Number 10’s tax-cutting budget did not benefit the highest earners the most.

“I don’t accept the characterisation of this growth plan as being disproportionately orientated towards higher earners,” he said.

However, not only is this numerically incorrect – as almost half of the gains from tax cuts next year go to the richest 5% of households – it also contradicts what Philp said on Thursday.

Abolishing the 45p rate of Income Tax will boost the take-home pay of the UK's highest earners (Yahoo News UK/Flourish)
Abolishing the 45p rate of income tax will boost the take-home pay of the UK’s highest earners (Yahoo News UK/Flourish)

Speaking to Sky News, he admitted it was “true” the mini-budget disproportionately benefits the highest earners – and claimed he “respectfully disagrees” with the International Monetary Fund’s warning that the government’s economic plans would worsen inequality in the UK.

The government’s position on the budget is at odds with a growing number of Tory MPs, who have expressed concern about its priorities.

Also on Sunday, Tory MP Bim Afolami said the government’s financial priorities were “odd” after it announced a cut in taxes for the highest earners, while hinting at a reduction in benefits for the poorest to pay for it this week.

And senior Tory MP and former cabinet minister Michael Gove said the cut to the highest rate of tax was “wrong”.

“Ultimately, at a time when people are suffering… to have as your principle decision, the headline tax move, cutting tax for the wealthiest, that is a display of the wrong values,” he said.

Last week, Tory MP Simon Hoare described the government’s economic plans as “inept madness”.

It comes amid growing condemnation from senior economics with Torsten Bell, chief executive of the Resolution Foundation, on Thursday saying: “If we seriously end up cutting benefits to fund tax cuts for the top in the most unequal large country in Europe then we’ve lost the plot.”

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