Skipton and Ripon MP Julian Smith has described his own government’s decision to make swingeing tax cuts as “wrong”.

Chancellor Kwasi Kwarteng announced the biggest package of tax cuts in 50 years in his mini-budget yesterday.

He said the UK economy was entering a “new era” and the measures would stimulate growth.

Paul Johnson, director of the Institute for Fiscal Studies, said those with incomes in excess of £1 million will gain more than £40,000 a year each and that the overall measures didn’t include “even a semblance of an effort to make the public finance numbers add up”.

Mr Smith, who supported Rishi Sunak’s failed Conservative leadership bid, also expressed concerns on Twitter:

“In a statement with many positive enterprise measures this huge tax cut for the very rich at a time of national crisis and real fear and anxiety amongst low income workers and citizens is wrong.”

In a statement with many positive enterprise measures this huge tax cut for the very rich at a time of national crisis & real fear & anxiety amongst low income workers & citizens is wrong. https://t.co/EeRfAcNGzf

— Julian Smith MP (@JulianSmithUK) September 23, 2022

However, Andrew Jones, the Conservative MP for Harrogate and Knaresborough who also supported Mr Sunak, welcomed this week’s government measures.

Writing on his Community News website yesterday, Mr Jones said:

“I am pleased with the extra support for households and businesses with fuel bills through the energy price guarantee and also today’s surprise announcement of the reduction in the basic rate of income tax down to 19 per cent.

“There are a huge number of measures, many focused on our productivity and investment which are the platforms for future growth. So, plenty to be positive about here in Harrogate and Knaresborough.”

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Businesses in the Harrogate district could receive major tax cuts and fewer restrictions on building as part of a government announcement today.

Ministers revealed North Yorkshire County Council is one of 38 local authorities it is talking to about becoming investment zones.

The government has said the zones will “will drive growth and unlock housing across the UK by lowering taxes and liberalising planning frameworks”.

However, a union has warned they could lead to poorer public services and a race to the bottom on employment terms.

The government has written to local leaders in every part of England inviting them to begin discussions on setting up zones in their area. Conservative-controlled North Yorkshire County Council was today confirmed as one of 38 that are keen to be involved.

The government has said the zones will receive lower taxes and ‘radically streamlined’ planning rules.

Businesses will get 100% business rates relief on newly occupied and expanded premises, full stamp duty land tax relief on land bought for commercial or residential development and a zero rate for employer national insurance contributions on new employee earnings up to £50,270 per year.

To incentivise investment, there will be a 100% first year enhanced capital allowance relief for plant and machinery used within designated sites and accelerated enhanced structures and buildings allowance relief of 20% per year.

Kwasi Kwarteng

Chancellor Kwasi Kwarteng said:

“That is an unprecedented set of tax incentives for businesses to invest, to build and to create jobs right across the country.

“If we really want to level up, we need to unleash the power of the private sector.”

‘Race to the bottom’

But the zones, which build on the government’s freeports initiative, was criticised by the North Yorkshire branch of Unison.

A spokesman for the union said:

“Our nervousness, which is probably shared by residents of North Yorkshire, is around a race to the bottom by deregulation.”

The spokesman said the zones set local authorities against each other and would be bad for public services, as well as ushering in a “lower standard of planning”.

He also warned it could lead to businesses in non-zone areas cutting wages and standards to compete. He added:

“I don’t blame local authorities for applying but what we need from government is a strategy that goes for a high skill, high wage economy rather than pitting one local authority against another.”

North Yorkshire County Council has been approached for comment.

Business groups in the Harroagate district have broadly welcomed today’s financial measures introduced by Chancellor Kwasi Kwarteng.

Mr Kwarteng announced a mini-budget in the House of Commons this morning.

It included cutting income tax, stamp duty and reversing the rise in National Insurance contributions and corporation tax.

Mr Kwarteng also lifted the cap on bankers’ bonuses and heralded the measures as a “new era” for the UK economy.

David Simister, chief executive of Harrogate District Chamber of Commerce, said he welcomed some of the measures.

He said:

“The UK’s economic situation is very fragile, we are technically in recession, inflation is putting pressure on household budgets and an increase in interest rates will put a strain on many homeowners’ budgets.

“The aim of this emergency budget is to stimulate the economy by cutting taxes and giving people more money in their pockets.

“The scrapping of the national insurance rise and reversing the increase in corporation tax is certainly good news for businesses large and small.

“Employees across the board will benefit from the NI reduction, as well as the cut in the basic rate of income tax, but the latter won’t be felt until after next April. Cutting the cap on bankers’ bonuses is a contentious issue for some, but it is designed to attract the brightest and the best in the industry to the UK.”

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Ripon BID welcomes corporation tax move

Lilla Bathurst, manager at Ripon Business Improvement District, said it remained to be seen if the planned tax cuts will work.

She said:

“Ripon BID welcomes the scrapping of the planned increase in corporation tax and the reduction of national insurance contributions  and the relief this will bring to businesses and employees.  It remains to be seen if these tax cuts will generate sufficient growth to off-set the tax the Chancellor has given up.

“Ripon BID is disappointed that the government did not follow the recommendations set out in the BusinessSOS campaign, supported by over 150 Business Improvement Districts including Ripon BID.  We asked for a package of measures including business rates relief and a reduction in headline VAT rates for retail, leisure and hospitality.

“The previous announcement of support for businesses energy bills was welcomed but as stated previously we feel did not go far enough and uncertainty remains.”

Knaresborough chamber warms of business failures

Knaresborough Chamber of Trade and Commerce said it welcomed the cut in corporation tax, but added that this winter will still be difficult for many businesses.

Chamber executive member Peter Lacey said:

“I like to be positive, but can’t say I’m confident that we’ll not see business failures in the coming months.

“We’re committed to supporting the businesses of the town and its surrounding area but recognise that we’ll need to redouble our efforts in the current economic climate.”

Nidderdale chamber: measures ‘give confidence’

Meanwhile, Tim Ledbetter, chair of Nidderdale Chamber of Trade, said:

“We welcome measures announced by the government today, whilst reserving judgement on many of them until the finer detail has been analysed.

“The measures will hopefully give confidence to the public and businesses who understandably have had their confidence rocked by events, not just in this country but from around the world.

“I suppose with the cancellation of the planned rise in duty on beer, wine and spirits people can at least either celebrate or if disappointed with the measures drown their sorrow.”