LIZ Truss’s planned axing of the National Insure rise will help Britain’s poorest by just 63p a month, according to the Institute for Fiscal Studies. 

However, the proposal, which was a key pledge of the Prime Minister’s campaign during the Tory leadership contest, will boost the incomes of the richest by £150 a month. 

Chancellor Kwasi Kwarteng is expected to announce the reversal of the 1.25 percentage point rise brought in by Boris Johnson when he sets out his tax and spending plans at a mini-budget on Friday. 

According to the think tank, the poorest ten per cent of households, who on average earn £12,000, will save just £7.66 on their annual tax bill, which works out at just 63p per month or 14p per week.

Those in households with an income of £31,400 - the UK average - will save about £20 a month, while households with an income of £55,000 will save about £58 a month.

The richest tenth of households, those who earn an average of £108,000, will save £1,800 on their annual tax bill.

Tom Waters, a senior research economist at the IFS, told the Times: “Reversing the recent NICs rise would tend to benefit richer households more than poorer ones, even as a share of their income; the richest 10th, for example, would gain about £1,800 per year, or 1.7% of their income, and the poorest tenth about £7 per year, less than 0.1% of their income.

“That’s partly just a natural consequence of the existing tax system: those towards the bottom of the income distribution don’t pay much in direct taxes, and so it’s hard to cut taxes in a way that makes a big difference to them.

“That said, there are more progressive ways to cut tax — raising the income tax personal allowance, for example, which is currently due to be frozen in cash terms until March 2025.

"Tax cuts along these lines, including a NICs cut, would of course strengthen incentives for people to move into work.”

Tony Wilson, director of the Institute for Employment Studies, told the paper the plans were a “tax giveaway to relatively high earners.”

He warned that they risked higher inflation.

He said: “The worry that the Bank of England and Treasury officials will be that the move is more inflationary than a more targeted subsidy or tax cut at those on lower incomes.

“Another £600 in the pocket of higher earners is likely to lead to more discretionary spending."

There is speculation Mr Kwarteng could unveil further tax cuts such as a future reduction in the basic rate of income tax by 1p or even 2p.

The chancellor is also expected to announce 12 special "investment zones across" the UK that could offer workers a significant discount in employer national insurance contributions for staff employed within the zones.

There also reports of plans to scrap a number of existing regulations, including, controversially, the cap on bankers’ bonuses and the government's plans to ban buy one get one free-type multibuy deals on junk food.

As it is a “fiscal event” rather than a full budget the Chancellor’s proposals will not be accompanied by the full range of economic forecasts produced by the independent Office for Budget Responsibility.

Politics as normal has been paralysed by the death of the Queen but with the official mourning period ending on Tuesday, the new Prime Minister will try to squeeze in as much as possible before the Commons goes on recess for the conference season this Friday. 

Ms Truss is expected to fly to New York for the United Nations General Assembly following the funeral, where she has a key bilateral meeting lined up with US President Joe Biden.

Back in the UK, MPs will return to Westminster on Wednesday, where those who wish to do so can take a new oath or affirmation to the King.

According to the PA, Business Secretary Jacob Rees-Mogg will then set out further details of the Government’s plans to help firms through the energy crisis.





 

When MPs file back into the Commons this week, having taken time away from political business following the Queen’s death, Speaker Sir Lindsay Hoyle said he hopes “we can be slightly better to each other”.

 

“When the House needs to, it comes together, and it is by far at its best,” he told BBC Radio 4’s Westminster Hour.

 

“And I think it was wonderful to be a Speaker where the House is united as one. I don’t believe I’ll ever see the House that good and that great again. I would like to believe so.

 

“I hope from now we can be slightly better to each other, we can show a little more tolerance and certainly a lot more respect to each other.

 

“And I would like to think that will be the way that we will go forward. That will be a wonderful legacy to the late Queen, and to the new King going forward.”