By Becky Morton
BBC political reporter
Watch: Chancellor Kwasi Kwarteng announces a "new era" for the UK economy
Chancellor Kwasi Kwarteng has unveiled the biggest package of tax cuts in 50 years, as he hailed a "new era" for the UK economy.
Income tax and the stamp duty on home purchases will be cut and planned rises in business taxes have been scrapped.
Mr Kwarteng said a major change of direction was needed to kick start economic growth.
But Labour said it would not solve the cost of living crisis and was a "plan to reward the already wealthy".
The pound sank to a fresh 37-year low as the chancellor gave his statement.
In a departure from Boris Johnson's economic policies, Mr Kwarteng has scrapped plans to push up taxes to pay for public services with the aim of boosting economic growth.
In a Commons statement, being dubbed a mini-budget, he said high tax rates "damage Britain's competitiveness", reducing the incentive to work and for businesses to invest.
He also unveiled a cut to the top rate of income tax from 45% to 40%, meaning the UK will have a single higher rate from April.
He confirmed a planned corporation tax increase from 19% to 25% would also be scrapped.
The total cost of the permanent tax cuts announced by the chancellor are estimated at almost £45bn by 2027, which the chancellor said would "turn the vicious cycle of stagnation into a virtuous cycle of growth".
"We need a new approach for a new era, focused on growth," he added.
Paul Johnson, director of the independent Institute for Fiscal Studies, said the statement amounted to the biggest tax cuts since the 1972 Budget, with the cuts 50% bigger than had been expected.
He said that the UK could be borrowing £120bn in three years' time to afford the measures.
Mr Johnson added that the plans were a "big gamble", with money being pumped into the economy when inflation remains high. However, he said they were "manageable" if economic growth "really picks up".
Labour described his statement as "an admission of 12 years of economic failure".
"The Conservatives cannot solve the cost-of-living crisis, the Conservatives are the cost-of-living crisis, and our country cannot afford them anymore," shadow chancellor Rachel Reeves said.
"The chancellor has made clear who his priorities are today. Not a plan for growth. A plan to reward the already wealthy. A return to the trickle-down of the past. Back to the future, not a brave new era."
Watch: Labour says Tories created 'vicious circle of stagnation'
The statement also included details of the cost of the government's plan to cap energy bills for households and businesses.
Mr Kwarteng said these estimated costs were "particularly uncertain, given volatile energy prices" but based on recent prices the total cost of the package for the six months from October was expected to be around £60bn.
"We expect the cost to come down as we negotiate new, long term energy contracts with suppliers," he added.
The government normally releases an independent forecast of how major tax changes will impact the economy, but Mr Kwarteng has opted not to do this, as his statement is not technically a Budget.
However, Mr Kwarteng promised the Office for Budget Responsibility would publish a full economic forecast before the end of the year, with a second to follow in the new year.
The independent Institute for Fiscal Studies think tank has described plans to ramp up borrowing to fund tax cuts as "a gamble on growth that may not pay off".
The huge increase in borrowing comes at a time when inflation - the rate at which prices rise - is at a 40-year high, leading to higher interest payments.
On Thursday the Bank of England raised interest rates from 1.75% to 2.25% - the highest level for 14 years - in an attempt to cool soaring prices.
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