Nursery World - Chancellor U-turn on 45p tax rate 'too late for families'

Kwasi Kwarteng’s decision to axe the 45p tax rate is ‘too late’ for families faced with higher mortgages and prices, Labour has said, while experts warn it will have little impact on the sustainability of the economy.

Chancellor Kwasi Kwarteng: 'We get it, and we have listened' PHOTO UK Government

Paul Johnson, director of the Institue of Fiscal Studies, said the U-turn did not address the issue of ‘fiscal sustainability’.

On Twitter he said, ‘From a fiscal point of view important to remember cut to 45p rate was just about smallest part of the "mini budget". What was a £45bn tax cutting package is now a £43bn package. This U turn has, in itself, essentially no effect on fiscal sustainability.’

In a statement the IFS said, ‘The direct impact of the government's U-turn on the abolition of the additional 45p rate of income tax is of limited fiscal significance. At a medium-run cost of around £2 billion a year, it represented only a small fraction of the Chancellor's mini-Budget announcements. His £45 billion package of tax cuts has now become a £43 billion package - a rounding error in the context of the public finances.’

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