Today’s budget was supposedly a ‘back-to-work’ budget, with policies trailed over the past few days promising to help parents, disabled people, and the over-50s return to the workplace.
In reality, though, this budget was back-to-normal for the Conservative Party – big tax cuts for some of the highest earners, and billions of taxpayer money spent subsidising big businesses.
Over thirteen years of Tory austerity, chancellor after chancellor has claimed that there is no money for public services and that the country cannot afford to pay key workers more.
However, somehow, today’s budget found the cash to offer tax cuts to big businesses and the highest earners.
Today’s budget was also as much about what the chancellor didn’t say as what he did.
The UK has the most expensive childcare in the OECD, and it is testament to the campaigning of UNISON and others that the chancellor used his budget to announce an additional £4bn investment.
However, what he didn’t mention is that many nurseries already struggle to provide the free hours that parents are entitled to, and many communities suffer massive shortages of provision.
Crucially, childcare doesn’t deliver itself – staff need better pay not lower staff-to-child ratios, but the chancellor said nothing about pay. Cutting staff reduces quality, not cost, and will only accelerate the recruitment and retention crisis in the sector.
Tax loopholes for big business
The chancellor announced a new scheme called “full capital expensing” that allows companies to deduct expenditure on things like IT equipment from their taxable profits.
This loophole is the equivalent of a corporation tax cut worth an average of £9 billion a year. It means that, as well as having one of the lowest corporation tax rates in the world, only 10% of businesses will actually end up paying the full rate.
This means ordinary taxpayers are giving big businesses a £9bn tax subsidy.
Another big tax loophole was left wide open too: the government’s failed windfall tax on oil and gas companies was untouched in today’s budget.
Since the windfall tax was announced, big oil and gas companies like Shell and Exxon have made record profits and paid out billions to their shareholders and executives – while despite the energy cap staying in place another three months, bills are more than double what they were last year.
It doesn’t have to be this way – windfall taxes in other countries have been far more effective, raising billions for the public purse and lowering bills. The chancellor missed an opportunity today to do the same.
Tax relief for the better off
One of the most expensive items in today’s budget was the big tax cuts for high earners who have accumulated significant pensions savings.
For those lucky enough to have over £1.07million in their pension pots, the chancellor abolished the lifetime pensions allowance. This policy only helps around 8,000 of the wealthiest pensions but works out as a £1.1bn a year tax giveaway by 2027.
Another group paying less tax will be some of the UK’s highest earners. As well as increasing the tax allowances for the wealthiest pensioners, the chancellor abolished the lifetime pensions allowance altogether for those lucky enough to have over £1.07 million in their pension pots – helping only 8,000 of the wealthiest pensioners – a huge public subsidy for those on bigger salaries.
Tax rises for everyone else
Meanwhile, the chancellor neglected to mention the taxes that ordinary households will be paying. A huge tax rise is coming next month, thanks to the freezing of tax thresholds in April.
Economists call this ‘fiscal drag’ – but in plain English all this means is basic rate taxpayers will be paying £500 more and those on the higher rate will pay £1000 more.
Over 3 million low paid workers will be dragged into the tax system at the bottom end, while another 2.5 million will be hit with the 40p and 45p top rates.
What is clear is that the cost of living crisis hasn’t gone away. The money for pay rises and public services exists – but it’s concentrated at the top while ordinary households continue to struggle with the rising costs of living.
The article Blog: Money for everything, everywhere, just not your pay rise first appeared on the UNISON National site.