Thursday, November 23, 2023
Tory budget spin uncovered
The Guardian reports that the Chancellor's carefully constructed narrative of Tory budget measures relieving the tax burden on lower and middle income workers may not be as compelling as Jeremy Hunt believes.
They say that an analysis by the Resolution Foundation has found that the tax cuts worth £20bn in the autumn statement favoured the richest 20% of earners, undoing much of the progressive policy changes made during the parliament’s first half.
The top fifth will gain £1,000 on average, five times the gains seen by the bottom 20%, who will be only £200 better off from measures that include a 2p cut in national insurance, according to the Resolution Foundation’s analysis.
The thinktank also found that while earnings are growing faster than previously estimated by the Office for Budget Responsibility (OBR) – the Treasury’s independent economic forecaster – real average earnings adjusted for inflation are not forecast to return to their 2008 peak until 2028 – “a totally unprecedented 20-year pay stagnation”.
The analysis said this parliament was on track to be the first in which real household disposable incomes fall – 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.
And the news gets worse:
Torsten Bell, chief executive of the Resolution Foundation, said that “despite the tax-cutting rhetoric”, taxes are on course to rise by 4.5% of the UK’s gross domestic product (GDP) between 2019 and 2020 and 2028 to 2029, equivalent to £4,300 a household.
The thinktank praised welfare benefit increases and a lifting of the cap on private rent subsidies after a freeze of several years that had been blamed for thousands of tenants being forced to leave their homes.
However, Bell added that the tax cuts and benefit rises were underpinned by an “implausible” squeeze on public services over the next five years that amounted to a 15% budget reduction in real terms for unprotected departments such as justice and transport.
Perhaps the Tory supporting newspapers should have paused for a bit before splashing celebratory headlines this morning.
They say that an analysis by the Resolution Foundation has found that the tax cuts worth £20bn in the autumn statement favoured the richest 20% of earners, undoing much of the progressive policy changes made during the parliament’s first half.
The top fifth will gain £1,000 on average, five times the gains seen by the bottom 20%, who will be only £200 better off from measures that include a 2p cut in national insurance, according to the Resolution Foundation’s analysis.
The thinktank also found that while earnings are growing faster than previously estimated by the Office for Budget Responsibility (OBR) – the Treasury’s independent economic forecaster – real average earnings adjusted for inflation are not forecast to return to their 2008 peak until 2028 – “a totally unprecedented 20-year pay stagnation”.
The analysis said this parliament was on track to be the first in which real household disposable incomes fall – 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.
And the news gets worse:
Torsten Bell, chief executive of the Resolution Foundation, said that “despite the tax-cutting rhetoric”, taxes are on course to rise by 4.5% of the UK’s gross domestic product (GDP) between 2019 and 2020 and 2028 to 2029, equivalent to £4,300 a household.
The thinktank praised welfare benefit increases and a lifting of the cap on private rent subsidies after a freeze of several years that had been blamed for thousands of tenants being forced to leave their homes.
However, Bell added that the tax cuts and benefit rises were underpinned by an “implausible” squeeze on public services over the next five years that amounted to a 15% budget reduction in real terms for unprotected departments such as justice and transport.
Perhaps the Tory supporting newspapers should have paused for a bit before splashing celebratory headlines this morning.
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> the tax cuts and benefit rises were underpinned by an “implausible” squeeze on public services
The Institute of Fiscal Studies reached the same conclusion from studying the papers. Prepare for a further attack on civil service numbers.
The Institute of Fiscal Studies reached the same conclusion from studying the papers. Prepare for a further attack on civil service numbers.
That 200 pounds for the lower end will be wittled away on paying all the increases that people will have to pay.One of those is food, prices are still rising.
SOME WHO GET THE RISES WILL BE ENTERING A TAX THRESHHOLD ANOTHER DROP IN THAT INCREASE.
Smoke and mirrors where only the rich get richer.
Alas you have to remember that most of the papers are govnt leaning and give a positive spin on the headlines (but will probably give the truth on the deep inside pages).
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SOME WHO GET THE RISES WILL BE ENTERING A TAX THRESHHOLD ANOTHER DROP IN THAT INCREASE.
Smoke and mirrors where only the rich get richer.
Alas you have to remember that most of the papers are govnt leaning and give a positive spin on the headlines (but will probably give the truth on the deep inside pages).
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