Mini-budget benefits London and south-east England, study shows
The chancellor’s mini-budget will disproportionately benefit London and the south-east, a new analysis has found, marking a sharp U-turn from the levelling up strategy of the previous government.
According to the Resolution Foundation, an independent thinktank, households in London and the south-east could gain an average of £1,600 next year from Friday’s fiscal statement. This is three times as much as those in Wales, the north-east and Yorkshire, which it predicts will gain an average of £500.
Its calculations also found that overall, Kwasi Kwarteng’s new tax and benefit policies will result in those on middle incomes losing most, with the poorest fifth of households gaining an average of £90, the middle fifth losing £780 and the top 5% of earners gaining £2,520.
The measures announced by the new chancellor on Friday included a string of tax giveaways that are expected to benefit the rich at the expense of those at the lower end of the income spectrum.
The new measures include scrapping the 45p additional tax rate on earnings above £150,000, removing the cap on bankers’ bonuses, cancelling the planned rise in corporation tax to 25% and doubling the stamp duty holiday on property purchases to £250,000.
The incomes of the richest 5% will grow by 2% in the next financial year as a result of the tax cuts, the thinktank said, while the remaining 95% of the population will get poorer as the cost of living crisis mounts.
An additional 2.3 million people will fall below the poverty line, it estimates, including 700,000 children.
Meanwhile, the Resolution Foundation said borrowing is on course to settle at 3.4% of GDP in the medium term – 0.7% higher than the average level under the Labour governments between 1997 and 2010.
The £45bn
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