Kwarteng unveils Mini Budget, promising to ‘release the enormous growth potential’ of the UK

By Sarah George

The mini-Budget has been long-awaited, with energy and commodity prices in the UK having skyrocketed over the past year and calls for more Government intervention mounting. The Government had put a pause on announcements during the Conservative Party leadership race, which concluded on 5 September with the election of Liz Truss. Truss, as expected, chose former Business and Energy Secretary Kwarteng to be her Chancellor.

As expected, his mini-Budget included several measures relating to taxes and benefits for UK citizens. These include:

Some sweeping changes for the private sector were also announced, including:

Kwarteng also emphasised the new Energy Bills Relief scheme for business, announced by new Business and Environment Secretary Jacob Rees-Mogg earlier this week. The scheme caps the price businesses pay for each unit of electricity and gas in line with pricing for homes. It will last for at least six months and most businesses stand to see energy bills reduced by 40-50%. Public sector organisations, NGOs and businesses of all sizes are covered. While this has been welcomed, some groups have asked for more long-term certainty.

Kwarteng did not mention energy efficiency in his speech, but documents from the Treasury state that legislation will be brought forward to oblige energy suppliers to “take action to reduce the energy bills” of customers. Measures will start in April 2023 and run for three years, totalling £1bn, it is stipulated in the small print of today’s announcements.

The documents state: “Energy prices are the largest driver of hight inflation.”

Growth Plan

Kwarteng also presented a new ‘Growth Plan’ first confirmed by the Treasury late last night (22 September). The full documents have now been published on the Treasury’s website. The Plan’s headline measure is the creation of 38 new ‘Investment Zones’ across England, spearheaded by local councils (see the end of the article for a full list). Similarly to Freeports, Investment Zones will be able to offer local incentives designed to encourage businesses to set up there, or to expand if they are already there.

In Investment Zones, businesses will be able to pay lower rates of tax. Plants and machinery will have tax removed entirely. Buildings and infrastructure will see tax rates reduced for a ten-year period. Stamp duty will be scrapped for purchases of land for business or residential developments. No business rates will apply to newly-occupied premises.

The Government will also relax planning rules in these areas – including, the Treasury has confirmed, environmental requirements for developers.

Investment Zones will only be created if local leaders so wish. Kwarteng said the Government is in “early discussions” at this point in time.

Outside of these Investment Zones, the Plan paves the way for cuts to planning regulations for nationally significant infrastructure projects across England. The Treasury has stated that around 100 projects will be impacted, from roads, to railways, to offshore wind farms.

“In 2021 it took 65% longer to get consent for major infrastructure projects than in 2012,” The Treasury stated. It bemoaned the fact that development, consultation and consent for major roads have taken, on average, five to seven years since 2012, and that some offshore wind farm developers have seen the process taking 13 years.

Kwarteng called the planning system “fragmented” and said:  “The time it takes to get consent for nationally significant projects is getting slower, not quicker, while our international competitors forge ahead. We have to end this.” He confirmed that more changes will be made in the coming weeks, including the scrapping of EU laws “that constrain our growth”.

Truss smiled at this statement, but it has already attracted much concern from the UK’s green economy. It has been reported that the UK could scrap nutrient neutrality requirements, which stipulate that planning permission should be denied for developments that could result in increased phosphate and nitrate levels in water, to give one example.

The local authorities named as being in talks to host Investment Zones are: