quinta-feira, 16 de março de 2023
Budget: UK on track for ‘disastrous decade’ of income stagnation
Budget: UK on track for ‘disastrous decade’ of
income stagnation
Taxes as a share of GDP are on track to reach a
70-year high but public services are being cut, says thinktank
Budget
2023: key points at a glance
Phillip
Inman
@phillipinman
Thu 16 Mar
2023 07.24 GMT
The UK
remains on track for a “disastrous decade” of stagnant incomes and high taxes,
despite cuts to public services, the Resolution Foundation said in its analysis
of the budget on Wednesday.
The
thinktank, whose stated aim is to improve the standard of living for low- and
middle-income families, said typical household disposable incomes were on track
to be lower by the end of the forecast in 2027-28 than they were before the
pandemic, when inflation is taken into account.
While the
chancellor had announced an “impressively broad suite of policies” to encourage
more people into work, he was unable to change the course of declining living
standards, the Resolution Foundation said.
“Britain’s
economy remains stuck in a deep funk – with people supported into work but
getting poorer, and paying more tax but seeing public services cut,” the report
said.
The UK is
forecast to have gone through “the biggest energy and inflation shock since the
1970s, while avoiding a recession, with unemployment peaking at just 4.4%”, it
added.
It said
taxes as a share of GDP were on track to hit 37.7% by the end of the forecast,
a 70-year-high and a 4.7% increase since 2019-20, the equivalent to nearly an
extra £4,200 for every UK household.
The rise in
taxes will still leave the chancellor with little room for manoeuvre at the end
of the Office for Budget Responsibility’s five-year forecast period, mainly
because a short-term lift in GDP growth will fade, leaving the overall tax rate
lower.
“If even
the slow growth of the past decade had continued, incomes would still be £1,800
higher than currently projected for 2027-28,” the thinktank said.
Torsten
Bell, chief executive of the Resolution Foundation, said: “Jeremy Hunt’s first
budget was a much bigger affair than many expected, combining improvements to
the dire economic and fiscal outlook with a significant policy package aimed at
boosting longer-term growth in general, and the size of the workforce in
particular.
“But
stepping back, the UK’s underlying challenges remain largely unchanged. We are
investing too little and growing too slowly. Our citizens’ living standards are
stagnant. We ask them to pay higher taxes, while cutting public services.
“No one
budget could turn that around, but it’s time Britain did.”
Labour promises to reverse Jeremy Hunt’s pensions giveaway for richest 1%
.webp)
Shadow chancellor says decision to axe lifetime
allowance is ‘wrong priority at the wrong time for the wrong people’
Budget 2023: key points at a glance
What the budget means for people on a range of incomes
Alexandra
Topping
Thu 16 Mar
2023 08.20 GMT
The Labour
party has vowed to reverse the chancellor’s £1bn budget pensions tax “gilded
giveaway” for the wealthiest 1% if it comes into power after the next general
election, as Jeremy Hunt defended his decision to scrap the lifetime pensions
allowance.
The shadow
chancellor, Rachel Reeves, said Labour would seek to force a Commons vote next
week on the decision, which critics argue will allow the wealthiest people to
put a limitless amount into their pension pots, which can then be passed on to
their heirs without paying inheritance tax.
In his
budget on Wednesday, Hunt said the measure would prevent consultants retiring
early from the NHS because the current pension rules meant it was not worth
them carrying on working.
The Office
for Budget Responsibility has estimated that – combined with an increase in the
pensions annual tax-free allowance, from £40,000 to £60,000 – it will increase
employment by 15,000 workers.
But Reeves
said a Labour government would reinstate the lifetime allowance and create a targeted
scheme for doctors rather than allowing a “free-for-all for the wealthy few”.
She added:
“At a time when families across the country face rising bills, higher costs and
frozen wages, this gilded giveaway is the wrong priority at the wrong time for
the wrong people.
“That’s why
a Labour government will reverse this move. We urge the chancellor and the
Conservative government to think again.”
Responding
to the criticism on Thursday, Hunt accused Labour of shifting their position
“overnight”. He argued that the shadow health secretary, Wes Streeting, had
called for the cap on pensions to be lifted last September.
“He seems
to have changed his mind overnight on that one. He said it was crazy and it
would save lives to get rid of that cap,” said Hunt. “Well, he was right in
September when he said that.”
Asked on
Sky News whether the NHS needed more nurses rather than consultants earning
more than £100,000, Hunt said: “We need more nurses and we are recruiting many
more nurses into the NHS. But yes, I think if you talk to anyone in the NHS,
they will say doctors leaving the workforce because of pension rules is a big
problem.”
Speaking on
BBC Radio 4’s Today programme, Hunt was asked if it displayed the wrong values
to give a large tax break to the very rich. He responded: “There are many
doctors who are worried about hitting their pension cap who are deterred from
taking on extra hours. So it’s not just the numbers who actually do hit the
pension cap, but I don’t think it is the wrong values to support our NHS.”
Dr Vishal
Sharma, a cardiologist and British Medical Association pensions committee
chair, said the tax break would make a difference to the number of staff
leaving the NHS.
Sharma told
BBC Breakfast the number of hospital consultants who had taken early retirement
had tripled, while the number of GPs had quadrupled in the past decade.
“We are
heading towards a sort of precipice where huge numbers were going to go unless
things changed. So it’s welcome that the chancellor’s listened to our concerns
and has actually taken some decisive action,” he said.
However,
Torsten Bell, the chief executive of the Resolution Foundation thinktank, said
the chancellor had “basically ignored” public services, leaving them facing
“implausibly tight spending plans” while giving handouts to the richest. “The
more you think about this policy, the worse it is,” he said.
Hunt argued
that the budget did more for parents of young children than older voters,
pointing to changes to childcare that will give 30 hours free to working
parents of under-5s from September 2025. “This is the biggest transformation in
childcare in my lifetime,” the chancellor told Sky News.
Hunt was
asked on the Today programme whether the plans amounted to “jam for the day
after tomorrow”, as they would not begin in full for all under-5s until
September 2025, while an “ambition” to provide more wraparound care for
children in schools would be implemented in 2026.
Hunt said
it was a “huge investment” of about £5bn a year and “the biggest expansion of
childcare in my lifetime”.
“That’s
going to mean that we’re going to need a lot of extra childminders, a lot of
extra nursery places. A lot of extra support in schools for the wraparound
offer,” he said. “We recognise that if you’re making as ambitious a change as
this, that it’s going to take time and that’s why we need to bring it in in
stages.”
