A poverty-focused think tank has claimed that the UK is heading towards nearly 20 years of stagnating pay, taking rising prices into account. The average wage will not recover to its 2008 level until 2026, the Resolution Foundation estimates. Wednesday’s Budget meant a £9bn net tax cut, which was dwarfed by a rise of £27bn in tax in 2019 alone, with a further £19bn after the next election. Four-fifths of employees should pay less tax this year with an average benefit of £450. Nevertheless, earners of £19,000 or less will suffer because more of their pay will be dragged above the frozen tax-free allowance of £12,570.
The foundation also calculated that three-quarters of all the personal tax cuts announced since 2019 benefited the richest 50% of households. In contrast, pensioners face an £8bn collective tax increase. Torsten Bell, chief executive of the Resolution Foundation, noted that government policy had changed since the 2010s, with cuts to younger and poorer households replaced by reductions for the over-65s and the wealthiest taxpayers.
Separately, the Institute for Fiscal Studies warned that the next parliament could be the most challenging in decades for a chancellor wishing to reduce debt. This election was likely to feature some “eye-wateringly tough choices” for politicians on spending and taxation, according to the IFS’s director, Paul Johnson. Households were set to be worse off after the next election than when it began
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