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HOUSEHOLD tax bills will be a “staggering” £3,000 higher since Boris Johnson entered Downing Street as a result of the changes announced in the Budget, a damning report found today.
The Resolution Foundation said that the calculation of the increase by 2026/27 means that the government’s tax take will be at its highest level since 1950.
And the poorest fifth in the country will be around £280 a year worse off as a result of the £20 cut to universal credit (UC), the think tank found.
It comes as the Institute for Fiscal Studies said that millions will be left worse off as low-income households face “real pain” due to Chancellor Rishi Sunak hiking taxes as costs rise.
The economic think tank said in its Budget analysis that the outlook for living standards does not match the Chancellor’s upbeat tone.
Researchers at the Resolution Foundation said that three-quarters of households on UC will be worse off as a result of the changes, even with new tapering rules and a rise announced by Mr Sunak.
Wages are also unlikely to rise in real terms this year due to high inflation and will only increase by around 2.4 per cent between the financial crisis in 2008 and 2024, compared with a one-third rise recorded in the 16 years prior to 2008.
Shadow chancellor Rachel Reeves described the foundation’s analysis as “staggering.”
The Labour MP said: “This is a Budget hammering working people while giving banks a tax cut.
“The Tories have no plan to tackle the cost of living crisis, no plan to shift the unfair taxes [that] they’ve hit working people with and no plan for growth.
“This was an out-of-touch, high-tax, low-growth Budget from a Conservative government that would rather waste billions of pounds of taxpayer cash than give households a VAT cut on their heating bills heading into winter.”
Ms Reeves said that Labour would “tax fairly, spend wisely, grow our economy with a climate investment pledge and plan to buy, make and sell more in Britain.”
Speaking at a Resolution Foundation post-Budget briefing today, Office for Budget Responsibility chairman Richard Hughes warned that the Chancellor’s ambitions to cut debt could “easily be wiped out” by lower growth, rising interest rates or further inflation.
Mr Hughes said that the Treasury chief had been able to put about £20-25 billion of revenue raised from increased taxes and better than expected forecasted growth into getting “debt falling” but warned that Mr Sunak’s plans had incorporated only a small margin of error.
With the possibility of inflation hitting the highest level in three decades, institute director Paul Johnson warned that “millions will be worse off in the short term.”
He said welfare payments will rise by around 3 per cent, while inflation could be 5 per cent.
“That will be a real — if temporary — hit of hundreds of pounds a year for many benefit recipients,” Mr Johnson added.
Mr Sunak has refused to commit to cutting taxes before the next general election, despite concerns among even Tory MPs at the growing squeeze on living standards.
He insisted that it remained his “ambition to lower taxes for people” when the fiscal conditions allowed.
But the institute said that the Chancellor would have to develop “new and radical ways” to fulfil his ambition after swelling the state to its largest level in some time.
Mr Johnson stressed that Mr Sunak’s policy choices were “almost entirely … unrelated to the pandemic,” with government departments “starved of funding for a decade” under austerity.
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