Watch: 'You won't like this package if you care more about the poor' says IEA boss on tax cuts
The leader of a Liz Truss-linked think tank has said people won’t like her package of financial support if they “care more about the poor”.
Mark Littlewood, director-general of the right-leaning Institute for Economic Affairs (IEA) and a long-term friend and political ally of Truss, said he was “bowled over” by the announcement and also hailed the scrapping of the “ridiculous” cap on bankers’ bonuses.
It comes after Truss’s chancellor, Kwasi Kwarteng, used Friday’s so-called mini budget to announce the biggest raft of tax cuts for half a century, in a “gamble” to raise falling living standards by boosting growth.
Critics have questioned the fairness of the package, with millionaires handed at least a £55,000 tax cut, which one MP pointed out is “more than a nurse earns”.
When those figures, collated by the left-leaning Resolution Foundation think tank, were put to Littlewood on Sky News, he said: “If all you care about is the distributional impact of the tax cuts in the next 24 weeks, you’re not going to like this package if you care more about the poor.
“If you think the government’s on to something, especially with these new investment zones and quite a lot of supply-side reform… then the rising tide does lift all ships.”
Littlewood is a university friend of Truss, and earlier this month claimed his friend “will be the most radical British prime minister in a century”.
Littlewood also said this week Truss has appeared at more IEA events “than any other politician over the past 12 years”.
When it was put to him that the government’s budget “benefits the wealthiest”, Littlewood agreed and said a £100,000-earning household “will be doing better, pound for pound, when these tax cuts come in, than a £20,000-a-year household".
But he claimed the government's growth plan could provide a pathway to push these households up to £35,000.
Littlewood also welcomed the end of “performative” gestures like the bankers’ bonus cap, which limited annual pay-outs to twice a banker’s salary.
Watch: Tory MPs cheer chancellor Kwasi Kwarteng for removing cap on bankers' bonuses
He said it was “guided by sound economic thinking rather than the way it will politically look in a newspaper headline the next day”.
Kwarteng, a former investment banker himself, claimed scrapping the cap will drive job creation in the City of London financial district, but the Save the Children charity accused him of prioritising bankers’ bonuses "over helping vulnerable children through the cost of living crisis".
His budget coincided with pound diving to a fresh 37-year low as “spooked” traders swallowed the cost of the spree launched by the chancellor and Truss.
Responding to Kwarteng's statement, shadow chancellor Rachel Reeves said: “The only things that are going up are inflation, interest rates and banker bonuses.”
She added: “If you are a pensioner worried about the cost of living, a working family seeing your mortgage rate going up, a small business whose costs are spiralling, the government’s announcements today do little to reassure them."
The anti-poverty Joseph Rowntree Foundation charity also said the government "has wilfully ignored families struggling through a cost of living emergency and instead targeted its action at the richest".