LOWERING taxes and cutting regulations to drive growth will be the “central mission” of Liz Truss’s government, the Treasury has said.

Her new Chancellor Kwasi Kwarteng is due to set out his tax and spending plans in a mini-Budget in the Commons on Friday morning.

He will tell MPs that growth is simply "not as high as it needs to be" and that he is prepared to end the "cycle of stagnation" that "has led to the tax burden being forecast to reach the highest levels since the late 1940s."

The Bank of England said yesterday it believed that the economy had already gone into recession. They raised interest rates to 2.25 per cent, the highest for 14 years, and economists warned they could soon rise again.

Mr Kwarteng is due to set out a number of measures intended to drive economic growth and stave off that recession. 

Plans for new “investment zones” will be a key plank.

These will “offer generous, targeted and time-limited tax cuts for businesses” and “liberalised planning rules” including the scrapping of the obligation for developers to make affordable housing contributions.

The Treasury says this will be replaced “with a set percentage of affordable homes, whilst ensuring communities get the infrastructure they want and need.”

Because planning is reserved, these investment zones will only appear in England.

However, the Treasury say they “will work in partnership with devolved administrations and local partners” to bring them to Scotland, Wales and Northern Ireland.

Mr Kwarteng is expected to tell MPs: “Growth is not as high as it needs to be, which has made it harder to pay for public services, requiring taxes to rise.

“This cycle of stagnation has led to the tax burden being forecast to reach the highest levels since the late 1940s.

“We are determined to break that cycle. We need a new approach for a new era, focused on growth.

“That is how we will deliver higher wages, greater opportunities and sufficient revenue to fund our public services, now and into the future.

“That is how we will compete successfully with dynamic economies around the world.

“That is how we will turn the vicious cycle of stagnation into a virtuous cycle of growth.

“We will be bold and unashamed in pursuing growth – even where that means taking difficult decisions.

“The work of delivery begins today”.

Mr Kwarteng will also introduce legislation to speed up the time it takes for major infrastructure projects to be approved.

The Treasury says that the development, consultation and consent for a large road scheme takes an average of five to seven years, while some offshore wind farms can take up to 13 years from development to deployment.

The Chancellor is due to “set out plans to reverse this trend, speeding up projects including new roads and railways, by reducing the burden of environmental assessments in the consultation process and reforming habitats and species regulations, driving the UK’s economic growth.”

Yesterday, Mr Kwarteng confirmed the government would scrap the 1.25 per cent hike in National Insurance brought in by Boris Johnson.

According to the Treasury, it will mean almost 28 million people keep an extra £330 of their money on average next year, while 920,000 businesses will save almost £10,000 on payroll.

The increase was announced just over a year ago to help fund health and social care.

It was set to be replaced by a Health and Social Care Levy from next April.

Mr Kwarteng confirmed that that too has been cancelled. He insisted funding for health and social care services will be protected.

Earlier this week, the Institute for Fiscal Studies (IFS) described the cut as a “giveaway for higher earners.”

According to their analysis, the poorest 10 per cent of households, who on average earn £12,000, will save £7.66 on their annual tax bill, which works out at just 63p per month or 14p per week.

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

The cut was a central plank of Liz Truss’s campaign during the summer’s Tory leadership contest. 

So too was her opposition to next year’s increase in corporation tax.

It is also thought that Mr Kwarteng will confirm a rumoured scrapping of the cap on bankers’ bonuses.

Meanwhile, the government also unveiled plans to change the rules around part-time workers who are claiming Universal Credit. Currently, if someone works more than nine hours a week, then they do not need to search for more work. That will increase to 15 hours at the start of 2023.

The move was condemned by Nicola Sturgeon during First Minister’s Questions. 

She told MSPs the Scottish Government used its powers and resources to “try to lift people out of poverty” while “the UK Government takes actions that push people into poverty.”

She added: “That is not a sustainable, sensible or morally defensible position.

“The UK Government now seems to want to increase the bonuses that are paid to bankers, while further eroding the incomes of those who are on Universal Credit. That is utterly indefensible.”