Liz Truss’s National Insurance cut will take effect in workers’ November payslips, Kwasi Kwarteng is expected to announce this week, as he ditches the Coalition-era focus on “sharing the proceeds of growth”.
In a statement to Parliament on Friday, the Chancellor will seek to deliver on the Prime Minister’s pledge during the Conservative leadership contest that her tax cuts would provide “immediate” help to families and businesses – with the scrapping of the health and social care levy now due to benefit employees and employers within weeks.
Mr Kwarteng is expected to be unapologetic about scrapping the levy, despite criticism of the benefit of such a move to wealthier people.
Senior figures see the move as part of a shift away from George Osborne’s overarching mantra of sharing the proceeds of growth, to instead focusing on increasing growth. A source said that Ms Truss and Mr Kwarteng were “focused on growing the size of the pie so everyone gets a bigger slice, rather descending into a redistributive fight over how we slice and dice the pie”.
Mr Kwarteng’s statement on Friday will follow a separate business support package due to be unveiled on Wednesday by Jacob Rees-Mogg, the Business Secretary. The plan was being finalised this weekend in talks involving Number 10, the Treasury and business department.
Later, the Chancellor will launch a “financial services package” entitled Big Bang 2.0, which is being drawn up to cut red tape and enhance competitiveness in the City. He is also due to announce the make-up of a new Council of Economic Advisers which will provide separate advice to Treasury officials, after Ms Truss railed against the department’s “orthodoxy” and Mr Kwarteng sacked its most senior civil servant.
Shift from sharing growth to increasing growth
Mr Kwarteng will link all of the measures to the Government’s focus on boosting economic growth. Ministers have been told that all policies should face the same test: “How will it help grow the economy?”
On Friday, Mr Kwarteng is also expected to formally scrap a planned rise in corporation tax and announce that he is lifting the cap on bankers’ bonuses – another signal of his overriding focus on growth.
The Prime Minister has also faced calls to bring forward the income tax cut planned for April 2024 and to slash business rates to help struggling high street firms.
Mr Kwarteng is expected to adopt a lower key approach than his predecessor, eschewing the photoshoots in which Rishi Sunak took part ahead of major financial statements – appearing on one occasion in slip-on sandals and, on another, in a Stanford University jumper.
He is also said to have ditched the practice under Mr Sunak of official materials on social media bearing the chancellor’s personal signature.