Liz Truss says tax-cutting policies could be 'unpopular' amid cost of living crisis

British PM, who is in New York for the UN General Assembly, says she wants to deliver more jobs and higher wages

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Britain's Prime Minister Liz Truss has conceded not all of her tax-cutting policies will be “popular” as she prepares to lift the cap on bankers’ bonuses while millions endure the cost of living crisis.

Her admission comes as Chancellor Kwasi Kwarteng prepares to announce in his emergency mini-budget on Friday a network of low-tax, low-regulation investment zones.

Ms Truss is currently in New York for the UN General Assembly, where she has been responding to questions about her economic plan. Some say her proposals run the risk of further increasing inflation and sending the pound to new lows.

Critics have taken issue with the timing of the likely lifting of the bankers’ cap introduced by EU legislation after the 2008 financial crisis. It limits annual payouts to twice a banker’s salary.

Ms Truss said it was important to make Britain more "competitive" amid a decline in living standards.

“Everything we do will be focused on delivering for people because ultimately what I want to see is more jobs, higher wages and more opportunities," she said.

Ms Truss was pressed on whether her government is on the right side as she also refuses to impose a windfall tax on energy companies. This would fund measures to prevent energy bills soaring further.

“We are on the side of delivering a higher wage economy, that’s what we need to do,” she said.

“Not every measure will be popular and there are always vested interests, people who oppose measures that increase economic growth.

Britain's Chancellor of the Exchequer Kwasi Kwarteng arrives for a Cabinet meeting at Downing Street in London. EPA.

“But what is important to me, what is important to the chancellor, is that people have more opportunities, there is more investment, there are jobs with higher wages. And we are prepared to make that argument. This is about growing the size of the pie.”

Ms Truss also defended the tax cuts coming in Friday’s “fiscal event”. These are expected to include a reverse of the national insurance increase and cancellation of the planned rise in corporation tax.

“Lower taxes lead to economic growth, there is no doubt in my mind about that,” she said.

Under her plan for investment zones, Ms Truss said these areas would benefit from a low-tax burden, reduced planning restrictions and regulations tailored on a case-by-case basis.

The Sun On Sunday reported that the new prime minister is now considering whether personal taxes could be cut for people working there.

Mr Kwarteng could announce as many as 12 of the in his highly anticipated budget, The Sunday Times reported. However, the newspaper made no mention of tax cuts for people.

Ministers are also said to have discussed whether environmental protections could be watered down in these areas to clear the way for new developments.

The government is reportedly looking at the West Midlands, Thames Estuary, Tees Valley, West Yorkshire and Norfolk as potential sites.

Updated: September 20, 2022, 6:19 PM
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