Wednesday’s budget saw chancellor Jeremy Hunt cut taxes, including national insurance contributions to the tune of £9bn – quite the splurge at a time when public services are under such extraordinary pressure.
For a high earning couple this is a nice little give away, just over £1,500 per year. However, our analysis shows that just 3% of the gains will go to the poorest, while the richest fifth of households will hoover up around 46%. This was by-and-large a move which bolsters the finances of the better off.
Thankfully, and after some apparent wavering, the government saw sense and took action both to uprate social security by an appropriate level of inflation and to increase housing support for private renters after a three-year freeze. We welcome those measures, though on both counts there is more than meets the eye.
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Firstly, in the past couple of years the government introduced emergency cost of living payments worth £900 per household for low-income households – the withdrawal of these payments mean that even with uprating, many households will see their annual income fall overall, despite facing ever higher prices. Just because inflation is slowing doesn’t mean prices have fallen – nor are they expected to in future. This really hasn’t been talked about enough, but for many there is a cliff edge in support.