On first sight there seems little in Rishi Sunak’s budget to scare the horses. With tax threshold increases delayed and Covid support continuing for the time being, Sunak has avoided an immediate hit to families’ wallets.
Look below the surface though and what becomes apparent is that those on the lowest incomes will suffer the most once the measures outlined in the budget kick in.
Welsh Liberal Democrat Economy Spokesperson Andrew Parkhurst said:
“The most glaring example of this is the cruel decision to reduce universal credit at the end of September by £20 per week, just at the time when unemployment is expected to rise. This will hurt the poorest families the hardest and shows the lack of compassion and empathy that is at the heart of Tory thinking.
“The freezing of income tax thresholds may look harmless enough. The effect though will be massive – particularly if inflation takes off - and will hit the lowest earners the hardest as more and more workers get caught by the threshold and have to give up a fifth of the additional cash they earn. The wealthy on the other hand don’t get the personal allowance so freezing it has no impact on them.
“Even raising the rates of corporation tax will end up hurting ordinary people. It may seem like a tax on the rich – hence its initial popularity – but ultimately the tax is paid by customers, workers and shareholders. It will therefore put upward pressure on inflation and downward pressure on pay and dividends.
“The existing rate of corporation tax may be relatively low compared to other major economies but there are many factors that influence international businesses on where to invest. Leaving the EU has already made the UK a less favourable destination for businesses wanting access to the EU so this just seems like the worst possible time to remove a competitive strength.
“There was precious little in the budget about helping the excluded 3 million entrepreneurs, and nothing on reforming the broken business rates system or helping exporters hit badly by Brexit.
“Reforms to social care were also absent (despite Boris Johnson’s assertion 20 months ago that he had a ready-made solution), as was anything extra for NHS staff or carers.
If the Tories were serious about rebuilding our shattered economy fairly there would have been more about enabling businesses to flourish, encouraging exports, attracting inward investment, ensuring the economy is more resilient and able to withstand future shocks, investing in public health and protecting the most vulnerable.
“As it is, Sunak may have kept the Tory’s manifesto commitment not to raise headline rates of income tax, national insurance or VAT but in doing so he has sacrificed the poorest members of society and risked damaging our national interest.”