Commenting on the Budget, Callum Price, Director of Communications at the Institute of Economic Affairs said: “The Chancellor has raised the white flag in the battle for economic growth. Instead of putting it front and centre of her plans, taking the necessary radical action to fix our tax system and strip back public spending to a sustainable level, she has instead prioritised keeping her backbenchers onside and doing her best to avoid painful headlines.
“The result is a mess of painful tax rises on working people, exactly the same people she pledged to protect, and the very people and businesses who drive economic growth.
“Where there should be a real vision and tangible plan to return economic dynamism to Britain, deliver the growth that could end our doom loop and improve the livelihoods of every Briton, we have been given yet another record high tax burden being used to support yet further swelling of the state.”
Julian Jessop, Economics Fellow at the free market think tank the Institute of Economic Affairs, said: “After months of damaging speculation, the Chancellor delivered yet another ‘tax and spend’ Budget, which will do little to tackle any of the UK’s deep-rooted economic problems.
“The overall package was not quite as punishing as some had feared, and the main tax increases will not kick in for several years. The Chancellor has also given herself more headroom than expected against the fiscal targets, which might make it less likely that she will have to come back for more any time soon.
“Spending will still be higher than previously planned, and taxes will rise even further. The Chancellor has broken the promise she made last year by extending the freeze on income tax thresholds for a full three years. This is the UK’s least stealthy “stealth tax”, since everybody is talking about it.
“Other key measures will target salary-sacrifice pension contributions and higher-value properties. These measures could easily backfire, discouraging savings for retirement and further gumming up the housing market. Higher taxes on dividends and landlords will also undermine incentives to invest.
“Relying on a dog’s breakfast of bitty tax increases is risky, because both the revenues and the wider economic impacts are relatively uncertain.
“There were some gestures to ‘cut the cost of living, but these measures just shifted the burden from bills to taxes, leaving households no better off. They will also lower headline inflation by just 0.4 percentage points next year, and inflation will still be higher for longer as a result of decisions made last year.”
Len Shackleton, Editorial and Research Fellow at the Institute of Economic Affairs, said: “The Chancellor has announced that minimum wages are to rise significantly, and that the differential between younger and older minimum wage rates will be further reduced. This is part of a longer-term move towards equalising pay for all minimum wage workers. A key figure is the increase of 8.5% in the hourly rate for 18-20 year olds. This increase is in effect a further ‘tax’ on employing young workers, following on from the minimum wage increase last year and the employer national insurance contribution hike. With unemployment amongst this age group already rising, this tax on jobs is likely to make it harder for young people to enter the labour market and push more onto benefits for years to come.”
Andy Mayer, Energy Analyst at the free market think tank the Institute of Economic Affairs, said: “While temporarily lower energy prices are welcome, they are no substitute for sustained lower costs.
“The Government should not delay 3 months to comment on the Fingleton report, a plan to reduce the policy cost of new nuclear power. They should commit to implementing it, in full, now.
“They should not play a shell game with renewables costs, temporarily hiding 75% of old wind farm bungs on tax bills, but reduce the subsidies, permanently.
“It is incoherent to do this while putting the cost of building Sizewell C on bills, making renewables look relatively cheaper, when the opposite is true
“Road or mileage pricing is likely inevitable, as fuel duty receipts fall. But it is again incoherent to increase subsidies for purchasing electric vehicles, then tax them. Cutting the subsidies to zero would save money now.
“The £4.4bn the EV excise duty is further expected to raise is more than offset by the £5-6bn fall in expected oil and gas revenues from the North Sea. It seems unlikely, then, that it can boost the roads fund as the Chancellor claimed.
“Similarly, while no change in fuel duty is welcome, the fiction that this is a freeze of an inevitable escalator that restarts in April 2027 should end. Cutting rates, conversely, would reduce the household bills for working people immediately.”
