Experts are warning that the tax cuts outlined in the Autumn Statement will be paid for by the largest real-terms cut to government spending since austerity. The Institute for Fiscal Studies and Resolution Foundation warn that Chancellor Phillip Hammond’s plans will cost billions at the expense of public services, especially as there has been no increase in spending on public services.
The plans involve lowering National Insurance from 12% to 10% in January at a cost of £10bn. Mr Hammond also extended several tax breaks for businesses. The Resolution Foundation stated that, “The idea that there is as much scope to cut spending today as there was in 2010, given the deterioration of public services is far-fetched.”
At the same rate of inflation, unprotected departments will experience greater than £20bn in budget cuts by 2027. Director Paul Johnson said “Put another way, the tax cuts are paid for by planned real cuts in public service spending.”
Although the government continues to assert that real-term spending on public services is increasing, the IFS warns that the UK’s tax burden is increasing more than it has since post-WWII. Despite the “tax-cutting rhetoric” of the Autumn Statement, there have already been £90bn of tax rises announced by the government, equivalent to taxes rising by £4,300 per household between 2019-20 and 2028-29.
By the end of this parliament, households are expected to become £1,900 worse off than they were at the start. The Resolution Foundation argues that the government will establish a “grim” record of living standards going down in this parliament
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