Kwarteng’s mini-budget will include tax reforms to help self-employed business owners, alongside scrapping a planned rise in corporate tax to help profitable larger companies. The chancellor will sharply increase borrowing to pay for a package of tax cuts and an emergency plan to rein in household and business energy bills, while announcing a raft of controversial regulatory reforms. The cap on bankers’ bonuses is expected to be scrapped and environmental legislation will be overhauled. “We will be bold and unashamed in our pursuit of growth — even when it means making tough decisions,” Kwarteng will say. He will also outline regulatory reforms in the City of London aimed at unlocking billions of pounds of investment from pension funds into infrastructure, part of Prime Minister Liz Truss’ drive to make the UK capital the world’s leading financial centre. Labor believes Kwarteng is sowing the seeds for Tory defeat by announcing tax cuts that disproportionately help wealthy and profitable big business while allowing bankers’ bonuses to rise. Meanwhile, the Institute for Fiscal Studies think-tank and investment bank Citi have warned that Kwarteng is set to put public finances on an “unsustainable path”. The chancellor will insist she will maintain “responsible public finances”. However, the government’s fiscal rule, which states that debt should be on track to decline as a share of GDP within three years, is to be suspended.

The chancellor’s “growth plan”, to be outlined to MPs on Friday, runs to around 30 pages and contains a costing of the Treasury, but there will be no new forecasts from Britain’s financial watchdog. Kwarteng’s plan to cut national insurance and scrap the planned corporation tax rise will cost £30 billion a year. It also plans to reduce stamp duty on home purchases. Labor believes the chancellor can go even further and cut the basic rate of income tax from 20p in the pound to 19p. The chancellor will only set costs for six months of his intervention to hold down household and business energy bills, although much of the program will last longer. The total cost has been estimated at £150 billion. The mini-Budget is expected to draw criticism from many quarters. The green lobby is likely to react with fury to Kwarteng’s plan to reduce the burden of environmental assessments and rewrite habitat and species regulations to speed up the delivery of 100 major infrastructure projects. However, around 38 local councils and mayoral districts are in discussions with the Treasury to create new investment zones in their areas, which will benefit from more liberal planning rules and time-limited tax cuts. The government is also seeking changes to the way self-employed business owners are taxed, to relieve small companies of unnecessary costs. Truss is committed to reviewing the tax levied on sole traders, freelancers and contractors under the so-called IR35 rules, which have come under attack for adding the kind of costs faced by permanent employees without the associated benefits. The IR35 rules have been revised in recent years, shifting responsibility from contractors to employers as to whether they should be considered employees for tax purposes. Employers fearful of large tax bills have chosen not to use contractors as a result, which has had a chilling effect on the freelance economy. Small businesses have already claimed victory after Kwarteng on Thursday confirmed plans to reverse the increase in national insurance introduced by his predecessor Rishi Sunak from 6 November. Business lobby groups had said the rise unfairly penalized employers across the UK. The move will cut taxes for 920,000 businesses by almost £10,000 on average next year. Craig Beaumont, head of external affairs at the Federation of Small Businesses, said this was a “good time” for UK business. “This marks the end of the ‘fucking business’ era of the previous government — and finally eliminates the threat of having the biggest tax burden on small business since Clement Attlee hanging over us,” he added.