- Chancellor has taken ‘important steps towards fairer
taxation’ by cutting allowances on capital gains and dividend
income
- But with real household disposable income to fall by 7 per
cent over next two years, more support for poorest families is
needed
- Today's policy announcements imply deep spending cuts and
fail to tackle poor prospects for growth, IPPR says
IPPR experts have reacted to key aspects of today’s autumn
statement.
Carys Roberts, executive director at IPPR, said:
“The big story today is of an economic outlook that makes
grim reading for families up and down the country. Disposable
income in real terms is falling 7 per cent over the next two
years, taking the average family back to 2013.
“In that context, the Chancellor’s task was to set out a
clear plan to support families and public services facing soaring
costs, and to invest to get the economy back on track. Doing so
is vital for credibility on the public finances.
“The good news is that there won’t be cuts as deep as some
have demanded in the short term, and he made important steps
towards fairer taxation through the reduction in allowances on
capital gains and dividend income taxation. IPPR has long argued
for these as part of broader reforms to equalise taxes on income
from work and wealth.
“But the bad news is that sticking to spending review plans
implies some departments will see their budgets
fall significantly below the spending
review's trajectory, in real terms in the next two
years, and the government has scheduled deep cuts for future
years. These decisions will hugely exacerbate the challenges
faced by departments still reeling from
austerity.
“The Chancellor has also left on the table more ambitious tax
reforms like equalising tax rates on income from work and wealth,
that could have funded investment that our public services so
desperately need and stronger support for family incomes.
Furthermore, his new fiscal rules will constrain investment
spending in future and risk hamstringing growth and net zero
plans.
“The spending cuts set out today are not necessary. The
Chancellor could have chosen to invest in the people and services
that make up the economy, and taxed the wealthiest to stabilise
the finances. This budget will be cold comfort to all of us who
rely on services and those who are feeling the squeeze on
incomes.”
Dr George Dibb, head of the Centre for Economic Justice
at IPPR, said:
“The Chancellor was keen to dub today’s package as a ‘Plan
for Growth’ but the OBR forecasts show another half decade of
economic stagnation ahead. The UK is the only G7 country yet to
surpass our pre-pandemic peak. The OBR now expects that not to
happen until late-2024 representing four more years without
growth, further hitting wages and investment.
“These poor prospects for growth aren’t improved at all by
today’s policy announcements. Without a more dynamic and growing
economy, not only will we not be able to raise prosperity, the
fiscal situation only grows more dire. Poor growth forces more
cuts in a ‘doom loop’ that we have to break out of.”
Rachel Statham, associate director for work and the
welfare state at IPPR, said:
“Uprating benefits in line with inflation is a welcome step
and will begin to plug the gap in families’ budgets next year.
But the government is playing catch up,” having failed to raise
the value of payments as prices soared over the last 12
months.
"Emergency support next year is much needed, but the ad hoc
payments announced today ignore the reality that higher prices
are here to stay. Families need support they can rely on to plan
for the future.
“People in receipt of means-tested benefits will receive a
flat £900 payment, but this fails to recognise that larger
families are facing much higher costs. Meanwhile housing support
will remain frozen for people in the private rented sector while
rents are expected to skyrocket.
“We need a serious plan to address the living standards
crisis across the UK – but today’s budget fell short.”
