IEA responds to the Spring Statement

Commenting on the Spring Statement, Mark Littlewood, Director General at free market think tank the Institute of Economic Affairs, said:

“This was a mitigation mini-Budget, not a radical one. 

“The overall tax burden remains largely unchanged, but Rishi Sunak has taken some minor steps to ease the cost of living – and has at least signalled his aspiration to get public spending back on a more sustainable footing.

“The reduction in fuel duty will make a small difference to households. The decision to raise the National Insurance threshold means workers on an average wage will see their contributions fall, despite the planned 2.5 percentage point rise going ahead. The pledge to reduce the basic rate of income tax is welcome.

“But the UK will spend £83bn on debt interest this year – almost double our entire defence budget. The Chancellor will not achieve economic 'security' without a commitment to drastically bringing down our tax bill and reducing government spending, which has spiralled out of control. Only then will he boost our anaemic growth forecasts."

Labour market expert and IEA Fellow Professor Len Shackleton said:

"Most of the employment-related measures are smoke and mirrors. Their effects will be trivial and will mainly just offset other government measures working in the opposite direction. The increase in the employment allowance is welcome, but the increase in Employer National Insurance Contributions remains.

"The Apprentice Levy should be scrapped: government needs to stop trying to manipulate employers' training preferences.

"Raising the NICs threshold to the same level as income tax reduces the impact of the higher employee NICs rate and the continuing failure to index-link the income tax threshold. But it could be an important first step in the long-overdue merger of income tax and NI, something which would make personal tax fairer and more honest. Although many Chancellors have seen the logic of such a merger, they have all bottled out. If Rishi Sunak took this forward, he would go down as a genuine reformer rather than yet another prestidigitator."