Liz Truss has made it clear she will remove the cap on bankers’ bonuses, saying she is willing to take on “self-serving interests” in her quest for higher economic growth.
Britain’s Prime Minister said on Tuesday that she and her Chancellor, Kwasi Kwarteng, are ready to make arguments for a controversial policy because “it’s about increasing the size of the pie”.
Kwarteng is set to present a tax-cutting mini-budget on Friday that will focus on measures he claims will boost Britain’s growth rate to pre-crisis levels of 2.5 percent a year.
Truss declined to discuss the plan to remove the EU cap on bankers’ bonuses – which are capped at twice annual salary – but her allies confirmed a Financial Times report last week that an announcement was imminent.
Later Tuesday, Truss confirmed that Friday’s fiscal event would reverse the Social Security increase announced by former Chancellor Rishi Sunak and the planned corporate tax hike.
She told the BBC: “I will always work to make sure we help those who are struggling. . . For this reason, we will take action against National Insurance and reverse this increase.”
“We have to look at all tax rates. So the corporate tax needs to be competitive with other countries in order for us to attract that investment.”
However, Truss acknowledged that her tax cut plans would initially benefit the wealthy more than the rest of society.
“I don’t accept that argument that tax cuts are somehow unfair,” she told Sky News. “What we do know is that people with higher incomes generally pay more in taxes. So when you lower taxes, there is often a disproportionate benefit because these people pay more taxes in the first place.”
When asked if she was willing to be unpopular, Truss said, “Yes. Yes I am.”
She added: “It is important to me that we grow the UK economy because that will eventually lead to higher wages and more investment in cities and towns across the country. That will ultimately put more money in people’s pockets.
Labor strategists could hardly believe that the new government was considering lifting pay cuts for bankers as one of its first economic policy measures. But they are aware that Truss will seek to brand the opposition party as “anti-growth.”
Kwarteng will also give more details on Friday about how the government’s plan to limit average annual household energy bills to £2,500 will be funded. Business Secretary Jacob Rees-Mogg is expected to provide further insight into a similar program for businesses on Wednesday.
Truss said that while the government would protect people and businesses from rising energy prices, the West had to make tough decisions because “we can’t compromise our security for cheap energy.”
Speaking to journalists ahead of her first trip abroad as Prime Minister, Truss added: “The Western world has become too dependent on authoritarian regimes, not only for our energy supplies but also for other essential minerals and other commodities.”
She said breaking Britain’s dependence on authoritarian regimes is “a price worth paying because our long-term security is paramount”.
Truss claimed the government’s decision to cap bills would cut headline inflation by up to 5 percentage points, adding: “Obviously economic growth will be higher than it would have been if we hadn’t acted because there is a weakening would have had an effect on the economy.”
Truss was forced to put politics on hold during the 10-day national mourning following the death of Queen Elizabeth.
She commended the officials, royal household and armed forces for overseeing the widely touted ceremonial events that marked “this very important moment in our nation’s history”.