Kwasi Kwarteng’s mini-budget on Friday will see the three-lock pension withdrawn. Experts have warned that bringing back the controversial policy “could see a very large increase”. State Pensions In decades”.
Professor Joe Nellis, Professor of Global Economy at Cranfield School of Management, told Express.co.uk that the reintroduction of the triple-lock would see “the biggest increase in state pensions in decades”.
He said: “The mini-Budget will confirm that the triple lock for pensions will be reintroduced, meaning that in April, state pensions will rise by around 10 per cent – the biggest increase in state pensions in decades.
“While this is good news for pensioners, the improvement will come after a difficult winter with high energy costs.
“This development could cheer those in work. With wage rates expected to reach 8 percent in the private sector and 3 percent in the public sector, workers are losing out and we could see strikes continue until 2023.”
In June the Treasury announced plans to return to the triple lock system, whereby the state pension is increased annually by a flat rate of inflation, average earnings or 2.5 per cent, whichever is higher.
Temporarily removed this year due to distorted data on earnings as a result of Covid-19, pensioners under the double-lock system remain with 3.1 percent.
However, Prime Minister Liz Truss has signaled her support for withdrawing the policy for the remainder of Parliament.
The hike in state pension will be determined by the CPI data released on September 19.
Mr Kwarteng has confirmed ahead of his Budget that the National Insurance increase brought in by Boris Johnson’s government in April will be reversed in November.
The Treasury said nearly a million companies would see their tax bill cut by an average of £10,000 as the increase is cut on November 6.
Mr Kwarteng is set to scrap a planned rise in corporation tax, cut stamp duty, lower the cap on city bonuses and create low-tax investment zones.
Ms Truss said Friday’s mini-Budget would “get more businesses in the UK” and “encourage more people to go to work”.
According to a speech given by Downing Street at a business roundtable discussion at the United Nations General Assembly in New York, the Prime Minister said: “Although this is just the beginning, our long-term plan is to simplify Britain’s taxes and make us a great place to invest and be unabashedly pro-business.”
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Professor Joe told Express.co.uk that the fiscal “giveaways” would provide a massive fiscal boost but lead to a series of unsavory record breaks when it comes to borrowing and inflation.
He said: “The mini-budget will take the national debt to over 100 per cent of GDP. Despite hundreds of billions of pounds of core support, it is financed by borrowing, which will put us in a delicate position for years to come.
“The government is relying on growth to pay this back, but with unemployment low, the UK’s ability to facilitate additional economic growth is limited.
“It will take years to address this, but if growth is not achieved, we will face further austerity and higher taxes later.”
Meanwhile, FairFuelUK, a public affairs campaign against fuel tax and VAT, said the chancellor’s mini-budget “needs a big cut in fuel tax to reduce inflation”.
Howard Cox, founder of FairFuelUK, told Express.co.uk: “Inflation eased by 0.3 per cent last month. This welcome drop is due to a 10p fall in pump prices in August, although food prices are still on the rise.
“The crisis in petrol and diesel prices is affecting the economy as much as energy bills. The damage to businesses, logistics, inflation, economic growth and hard-pressed low-income families due to the recent eye-watering pump prices is huge.
“Reducing transport costs will attract manufacturers and other businesses to work from the UK. It’s really a no-brainer.
“August’s fall in inflation is just in time to give Quasi the confidence he needs to cut fuel tax by up to 20p per litre, as most of Europe has already done.
“Making a big cut in fuel duty would reduce inflation and could be done by using the extra billions in VAT the government has received from the recent very high pump prices.
“But even a 20p cut would leave the UK with one of the highest car tax rates in the world. However, it would ease the burden on households and businesses and increase tax revenue to the Exchequer from growing the economy. That would be the result.”
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