The Resolution Foundation projects a significant drop in UK living standards, despite tax cuts by Chancellor Jeremy Hunt. The foundation highlights concerns over public service cuts and the impact on pensioners, amidst efforts to boost economic growth.
The Resolution Foundation has issued a stark warning about the future of living standards in the UK, projecting a historic decline over the course of the current parliament, despite national insurance cuts announced by Chancellor Jeremy Hunt. According to the foundation’s report, household disposable incomes are anticipated to decrease by 0.9% from 2019 to the end of 2024, marking a period characterized by stagnant growth and diminishing living standards. This downturn is expected despite Hunt’s budget decisions, which include £9 billion in tax cuts primarily benefiting younger generations, while older demographics, particularly those over 66, are set to experience notable financial losses.
In a move to alleviate some pressure, Chancellor Hunt has implemented a significant cut to personal taxes by reducing national insurance by 2p, marking the lowest level since 1975. This reduction is projected to save the average worker £450 annually and also extend benefits to self-employed individuals through a decrease in their national insurance rate. Despite these cuts, the overall tax burden remains a concern due to the freezing of income tax thresholds, a move that could negate the perceived benefits of the tax cuts through fiscal drag.
Furthermore, Chancellor Hunt has teased the potential merger of National Insurance and income tax, an idea that has stirred controversy and concern among pensioners. The proposition aims at addressing the double taxation on work compared to other income forms but has been met with skepticism due to the potential for significant tax hikes, particularly affecting pensioners and non-working individuals.
The Resolution Foundation’s analysis also highlights a worrying reliance on cuts to public services to finance these tax reductions. A planned £19 billion reduction in public expenditure post-election could severely impact already strained services. Among the most affected by these economic strategies are pensioners, who are predicted to face the most substantial financial setbacks, with an £8 billion collective impact cited by the foundation.
With the backdrop of Chancellor Hunt’s recent budget announcement, public and expert reactions have underscored the delicate balance between tax relief and the maintenance of vital public services. The proposed changes, notably the national insurance cut and potential future merger with income tax, have ignited a debate on their long-term implications for different demographic groups, particularly affecting the nation’s pensioners.
