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Richer Britons benefit most from the autumn statement, new analysis of Jeremy Hunt’s announcement shows. The Resolution Foundation calculated that about 40% of the gains from the tax and benefit measures on Wednesday will go to the richest fifth.
Those measures include cutting the main 12% rate of employee national insurance contributions by two percentage points to 10% from January, the start of an election year. The top 20% will gain £1,000 on average from Hunt’s changes, five times the £200 gains seen by the bottom fifth, Resolution says.
The IPPR came to a similar conclusion too – they worked out that for every £100 Jeremy Hunt spent on personal tax cuts, £46 will benefit the richest fifth of households. Only £3 of every £100 of tax cuts will go to the worst-off families, they say.
Yesterday, the New Economics Foundation said the poorest households will be more than £200 per week short of an acceptable standard of living following the autumn statement. But despite yesterday’s measures, the tax burden is still heading towards a postwar high, with the £20bn worth of tax cuts set against about £90bn of tax rises (including higher corporation tax) already announced this parliament.
The autumn statement, though, was also based on a squeeze on government departments over future years – which would erode £19bn from the real value of departmental budgets. "Such a plan is simply implausible, given inflationary pressures on departments."
Torsten Bell, chief executive of Resolution, explains: “Jeremy Hunt yesterday got his pre-election giveaways in early, with an autumn statement offering tax cuts today, at the price of implausible spending cuts tomorrow ... Tax-cutting rhetoric clashed with tax rising reality, and positive steps to encourage business investment combined with a growth sapping hit to public investment.
“Ultimately this reflects the pressures, not only of an upcoming election, but of governing a sicker, older, slower growing Britain, amidst an era of far higher interest rates. That might be difficult for policymakers, but it’s a disaster for households whose wages are stuck in a totally unprecedented 20 year stagnation. This parliament is set to achieve a truly grim new record: the first in which household incomes will be lower at its end than its beginning.”
Overall, says Resolution, the UK us also facing a “grim new record on living standards”: "With just a year to go until the next general election, this parliament is on track to be the first in which real household disposable incomes have fallen (by 3.1% from December 2019 to January 2025). Households will on average be £1,900 poorer at the end of this parliament than at its start."
We’ll hear more from Resolution, and the IFS, and other economists through the day.
Energy bills
Households across Great Britain will begin the new year with a 5% rise in energy bills after the regulator Ofgem raised the price cap to an average of £1,928 a year for the typical gas and electricity bill.
Ofgem has just announced it is raising the maximum price that energy suppliers can charge their customers from £1,834 a year for the typical household between October to December. The rise follows a rise in global gas market prices after the start of the Israel-Hamas war last month.
The increase in energy bills announced this morning is the last thing families need as we approach Christmas, says TUC general secretary Paul Nowak.
Car industry
In a boost to the UK sector, Nissan is expected to commit to making future electric versions of two of its best-selling models at its Sunderland plant. Nissan will announce it will build new electric Qashqai and Juke models at the Sunderland site - a decision that will help safeguard thousands of jobs. The decision, after months of talks involving Rishi Sunak and Jeremy Hunt, is expected to be announced tomorrow. According to Sky News, Nissan has been promised a significant government funding guarantee, although it was unclear whether taxpayer cash would be provided upfront.
The agenda
• 9am GMT: Resolution Foundation briefing on the autumn statement
• 9am GMT: Eurozone ‘flash’ PMI survey of manufacturing/services
• 9.30am GMT: UK ‘flash’ PMI survey of manufacturing/services
• 10.30am GMT: IFS briefing on the autumn statement
We’ll be tracking all the main events throughout the day ... |
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