Was that it?
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Budget 2024
After months of rumour and speculation, on Wednesday Jeremy Hunt finally took to the despatch box to deliver his budget. Despite there being some positive measures, overall taxpayers will have been expecting far more.
We kicked the week off with an update to our lifetime tax research ([link removed]) . Since it was last published in 2022, the average lifetime tax bill for a household has increased to £1.2 million! This includes paying a whopping £587,760 in income tax alone ([link removed]) , and that’s before accounting for the impact of frozen thresholds. This mammoth tax bill equates to 19.5 years of gross income for the typical household. John O’Connell, our chief executive, blasted the latest numbers: “Taxpayers are spending almost half their working lives just to pay off the taxman, with most families comfortably tax millionaires.”
Hammering the message home, our head of campaigns, Elliot Keck. joined the Politics Live panel on the BBC. As Elliot told viewers across the country: “When public spending is close to £1 trillion, about 47 per cent of GDP, you’re probably squeezing the taxation system as hard as you can.” You can see Elliot’s appearance in full here. ([link removed])
With all this in mind, we hand delivered our petition to cut income tax to the treasury. Thousands of you took up the call and we left the chancellor in no doubt about what taxpayers expected.
The stage was set for Hunt to be bold and deliver meaningful relief to hard pressed taxpayers. What we got clearly fell short.
The good
There were undoubted positives in the budget. The continued freeze on fuel duty is a lifeline for drivers in the ongoing war against motorists (see ULEZ expansion, congestion charges, and low traffic neighbourhoods to name but a few).
Likewise, freezing alcohol duties will be welcomed by publicans and punters alike. The humble pint is always in the crosshairs of the nannying health lobby so, while a cut would have been preferable, not actively worsening the situation for Brits enjoying a tipple is the next best thing.
Jeremy Hunt also promised a renewed commitment to increasing productivity in the public sector, something TPA research has shown to be sorely lacking ([link removed]) over recent years. As with seemingly everything the government does, it comes with a hefty price tag so we’ll reserve judgement for now.
But the headline change was a reduction in national insurance, knocking a further 2p off in addition to the changes announced at the autumn statement. This is undoubtedly good news for workers as is the implied goal of merging NI with income tax, a dramatic simplification of the tax system.
Following the budget announcements, our head of research, Darwin Friend, appeared on Times Radio, to discuss what merging NI and income tax ([link removed]) would actually mean. As Darwin explained: “It certainly makes sense. We have an extremely complex tax system as it currently stands with one of the longest tax codes in the entire world.” Check out Darwin’s full interview here. ([link removed])
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The bad
Complete silence on thresholds and income tax. While the national insurance reduction is a welcome boost for workers, cutting NI does nothing for pensioners. As you know, the TPA were campaigning for Hunt to either cut income tax or unfreeze tax thresholds. Our research ([link removed]) has shown just how damaging the threshold freeze has been. In 2023-24, there is set to have been almost 2.5 million more people paying income tax than in 2021-22 when the thresholds for the personal allowance and higher rate were frozen. TPA research fellow Rory Meakin has a useful thread ([link removed]) comparing the impacts of frozen thresholds vs national insurance cuts on X ([link removed])
Despite the current huge levels of public spending, the chancellor refused to countenance cutting the cost of government, committing to day-to-day increases of 1 per cent in real terms. They haven’t been able to kick their spending addiction just yet.
Hunt opted to introduce a new tax on vapes, supposedly to make it more expensive for children. As I explained before ([link removed]) , taxing vapes is not only unnecessary to prevent children buying them (something that’s already illegal), it’s completely counterproductive to the government’s smoke free agenda. Be honest Jeremy, it’s just another tax grab.
In this week’s blog, Elliot gives a full rundown of the highs and lows from the budget ([link removed]) , rightly observing that: “This week was a damp squib - things certainly didn’t get worse, but they can hardly be said to have got much better. There were wins that should be acknowledged, but they were accompanied by a range of spending pledges and tax rises.” Check it out here. ([link removed])
The downright horrifying
The real national debt
To put all this in perspective, our research team rounded off the week with some numbers that will give us all sleepless nights. In a new briefing following the budget, they revealed the real national debt now stands at ÂŁ12.1 trillion! ([link removed])
That’s equivalent to more than £180,000 per person. The total debt, which includes PFI and pension liabilities, is more than four times the size of the UK economy and is more than the economic output of Africa, Central America, Canada, Australia and New Zealand combined. Ministers must pull their heads out of the sand and start tackling this monumental sum now!
Click to read more ([link removed])
And now for something completely different
As we reported last week, the TPA team were in Pembrokeshire campaigning against the record tax rise proposed by the council of 16.31 per cent.
Having delivered thousands of leaflets, spoken to countless residents, and urged them to use our dedicated campaign website to contact council bosses opposing the increase, at the 11th hour, cabinet members found a way to limit the hike to 12.5 per cent ([link removed]) .
This is undoubtedly still a huge rate rise for the people of Pembrokeshire but we’re proud that our efforts helped limit the damage to household finances.
Benjamin Elks
Grassroots Development Manager
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