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National Insurance cuts and changes to the Work Capability Assessment are among measures in yesterday’s Autumn Statement that favour the wealthiest 20 per cent of the population, according to analysis by the Resolution Foundation.
Around 40 per cent of the gains from the tax and benefit measures announced in the Autumn Statement will go to the richest fifth of the population, according to analysis by the Resolution Foundation think tank.
It says this includes cuts to National Insurance, boosts to Local Housing Allowance and changes to the Work Capability Assessment.
The Foundation estimates that the top 20 per cent gain £1,000 on average, five times the gains seen by the bottom fifth (£200). It adds that households will, on average, be £1,900 poorer at the end of this Parliament than at its start.
Nevertheless, all the tax and benefit measures announced in this Parliament favour the poorest, with the richest fifth of households set to lose £1,100 on average, while the poorest 20 per cent gain an average of £700.
The Foundation says that the £20 billion of tax cuts announced yesterday compare to around £90 billion of tax rises (including higher Corporation Tax) already announced this Parliament. So, despite the tax-cutting rhetoric, taxes are rising by 4.5 per cent of GDP between 2019-20 and 2028-29, equivalent to £4,300 per household.
It adds that, by not fully accounting for higher inflation in public services spending plans, unprotected departments such as Justice, Communities and Local Government and the Home Office are set to see their per capita day-to-day budgets fall by 14 per cent – equivalent to a real-terms cut of £17 billion – between 2022-23 and 2027-28.
And, although nominal wages are growing faster than previously forecast, it says this simply reflects the reality of higher inflation, with real wage growth remaining muted. It states: “With just a year to go until the next General Election, this Parliament is on track to be the first in which real household disposable incomes have fallen (by 3.1 per cent from December 2019 to January 2025).”