Liz Truss’s plan to cut taxes for the rich and corporations is not “trickle-down economics”, a Conservative minister has said.
The prime minister on Tuesday said the rich would get a “disproportionate benefit” out of her economic approach but that this would ultimately be good for “everyone in this country”.
The comments were widely interpreted as a return to “trickle-down economics” – the belief that helping the rich will benefit the wider economy.
But asked about the government’s strategy on Wednesday, foreign office minister Gillian Keegan said: “That wasn’t actually a message.”
“You cannot say what we’ve done is trickle-down economics. You know, we’ve just put a massive package in place, which the Chancellor will outline the cost of that and how we’re going to deal with that,” she said.
The minister told the BBC that the government had unveiled a “massive” package to support people and that “if you look at the definition of trickle-down economics, that definitely does not fit it”.
Ms Keegan added: “There’s no way you could describe our approach as trickle-down … It does help everybody to be pro-growth and pro-business.”
Policies prioritised by Ms Truss include a cut to corporation tax, abolition of the cap on bankers’ bonuses, and a reduction in National Insurance.
Chancellor Kwasi Kwarteng is also reportedly considering a cut to stamp duty in an upcoming emergency budget scheduled for Friday.
He will also confirm the cost to the Treasury of plans to cap the cost of energy bills this winter.
The insistence that the UK’s economic policy does not amount to “trickle-down” comes as Ms Truss meets Joe Biden in New York today.
Hours before the meeting Mr Biden launched an attack on the concept.
“I am sick and tired of trickle-down economics. It has never worked,” he posted on social media.
“We’re building an economy from the bottom up and middle out.”
Though the tweet was intended for a domestic audience, it appeared to put Ms Truss at odds with Mr Biden ahead of their first meeting.
On Tuesday the prime minister was asked about her economic approach and said: “I don’t accept this argument that cutting taxes is somehow unfair.
“I mean, what we know is that people on higher incomes generally pay more tax.
“So when you reduce taxes, there is often a disproportionate benefit because those people are paying more taxes in the first place.
“We should be setting our tax policy on the basis of what is going to make our country most successful, what is going to deliver that economy that benefits everyone in this country.”