Tax-cutting policies are not 'trickle-down economics' and will 'help everyone', minister insists

21 September 2022, 09:36 | Updated: 21 September 2022, 09:40

Tory Minister Gillian Keegan: You can't describe what we're doing as trickle-down economics

Liz Truss' controversial tax-cutting policies are not "trickle-down economics" and will "help everyone" by boosting economic growth, a government minister has insisted.

Foreign Officer minister Gillian Keegan has argued that the Prime Minister's plans for a taxation revolution will help everyone in society, despite claims they will disproportionately benefit the rich.

Asked how letting bankers have bigger bonuses helps people, such as train drivers who are struggling to pay their bills, she said: "We have to focus on growing our economy.

"We have to look to the future, we have to look to rebuild and have a pro-growth and get moving again."

Pressed on how tax-cutting policies would help the rail worker, Ms Keegan said: "The biggest part of our economy is financial services - it's 8.3% of GDP, it contributes £73 billion to the Exchequer every year, and if that grows, everybody benefits.

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"If we can grow our economy, everybody in our whole economy benefits, there's more jobs, more prosperity, there's more money in the exchequer to help us pay down debts. These things help everybody."

She dismissed claims that the Government's plans are "trickle-down economics" and said we must focus on the growth of our economy.

"We've just put a massive package in place to support people with their energy bills, there's no trickle-down about it, it's direct, it's direct to people's bank accounts, it's directly off their bills, and that's on top of the support that we already had in place."

The Prime Minister has confirmed long-known plans that she will reverse the rise in National Insurance contributions and cancel the planned hike in corporation tax.

But she hinted she may look to go even further with tax cuts.

Her Government will also need to defend the planned lifting of the cap on banker's bonuses, especially as US President Joe Biden hit out at "trickle down economics" – and Ms Truss is due to tell world leaders to enact tax cuts to fuel growth and curb the influence of autocratic states like Russia.

Ms Truss, who has followed the Queen's funeral with a visit to New York for the United Nations General Assembly, said: "The number one thing we need to deliver as a government, and in fact as a country, is economic growth.

"Lower taxes lead to economic growth, there is no doubt in my mind about that. Now, there are of course other measures that we have to take to spur economic growth as well."

The Times reported that the Chancellor Kwasi Kwarteng is also planning to announce a cut in stamp duty in a further attempt to boost growth - although Downing Street refused to comment.