Ministers “actively working against” families with mini-Budget, Reeves says

Rachel Reeves has accused the government of “actively working against” families after Kwasi Kwarteng set out plans to scrap the additional tax band for the highest earners and axe the cap on bankers’ bonuses as part of his mini-Budget.

The Chancellor announced in his fiscal statement this morning that the top rate of income tax – the 45% rate for earnings over £150,000 – would be abolished. He also confirmed plans to scrap the cap on bankers’ bonuses, which was imposed following the 2008 financial crash.

Kwarteng revealed that a planned increase in corporation tax – from 19% to 25% – would be cancelled and that the rise in National Insurance contributions brought in by Rishi Sunak would be reversed from November.

Addressing the Commons following Kwarteng’s statement, the Shadow Chancellor declared: “The Chancellor has made clear who his priorities are today. Not a plan for growth, a plan to reward the already wealthy. A return to the trickle down of the past – back to the future, not a brave new era.”

Reeves said: “As the Tories become more and more detached from reality, millions of people, millions of our constituents, are lying awake at night worried about how they’re going to make ends meet.”

“It’s not just the Conservative party is not working for ordinary families. It is actively working against them,” the Labour frontbencher added.

Reeves told MPs that the government’s proposals were based on an “outdated ideology” that rewarding the wealthy benefits the whole of society. She declared: “They have decided to replace levelling up with trickle down.

“As President Biden said this week, he is is sick and tired of trickle-down economics. And he is right to be. It is discredited, it is inadequate and it will not unleash the wave of investment that we need.”

Reeves said: “Labour believes in wealth creation. We will always support enterprise, creativity and hard work. We want British business to grow, to be successful and to contribute to our country’s prosperity.

“What we don’t believe – as the Chancellor and Prime Minister do – is that British workers are idlers. We understand that it is the workers who turn up every day to make a great product at a factory or deliver a great service in the store who generate growth.

“It is the teachers giving the young people the skills they need. It is the doctors and nurses keeping people well. The entrepreneur taking a personal risk to start a new business. These are the people who generate growth – and they all deserve to share in it too.”

Reeves stressed that the government’s announcements will do “little” to reassure those concerned about the rising cost of living.

“Bigger bonuses for bankers, huge profits for energy giants, shamelessly shielded by Downing Street, and all the while ministers pile the crushing weight of all of these costs onto the backs of taxpayers,” she said.

“The verdict is clear. When it comes to the economy, this Tory leadership do not know what they are doing. The Conservatives cannot solve the cost-of-living crisis. The Conservatives are the cost-of-living crisis. And our country cannot afford them anymore,” Reeves concluded.

Commenting on Kwarteng’s statement, 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.”