Several firms conducted research among their customer bases to discover what the nation’s priorities are ahead of the Government’s spending review and autumn Budget, both set to be unveiled in the House of Commons later today by Chancellor Rishi Sunak. Investment platform interactive investor found 14 per cent of its customers want to see extra funding for the long-suffering care sector, while 12 per cent want to see more “green initiatives”.
A survey carried out by Close Brothers Motor Finance found a third of Britons would like to see space in the Chancellor’s Budget for more electric car charging points to be installed across the country, while 31 per cent would like to see Government funding or grants to help with the outlay for installing charging points at homes.
A further 29 per cent said they would like to see funding for all new-build homes to have electric car charging points installed as standard and 38 per cent said they wanted the Government to help make electric vehicles more affordable.
Meanwhile, 47 per cent of Energy Helpline customers said they expect to adopt more sustainable behaviours at home in the next 12 months as a direct result of the energy crisis, with nearly half saying cutting down on the amount of energy used around the home is now a priority. Two in five said the Government has a responsibility to foot the entire bill for helping people make their homes more energy efficient.
“We all have our reasons for preferring particular fiscal policies, but what stands out is that over 40 per cent of respondents in our survey want to do some social good,” says interactive investor’s Lee Wild. “This selfless and altruistic bunch would like to see more money for either the care sector, greater incentives for green initiatives or higher taxes to pay off the UK’s pandemic debt.”
Higher taxes are already slated across the board, with Treasury announcing several measures ahead of this afternoon’s Budget statement, including plans to increase class IV and employer national insurance contributions as well as dividend taxation by 1.25 percentage points in the spring.
A new health and social care levy was announced in September, next year taking the form of a rise in national insurance rates by 1.25 per cent, while in March 2021 Mr Sunak upped the tax burden on business shoulders with a hike in corporation tax from 19 per cent to 25 per cent due from April 2023. Yesterday saw Treasury knock rumours of a VAT cut on energy bills on the head, something many households and businesses were hoping for amid sharply rising energy costs.
In a bid to deliver some good news, yesterday Mr Sunak confirmed an end to the public sector pay freeze – although nurses, teachers and police officers remain in the dark about their pay until next year. A rise in the national living wage from £8.91 per hour to £9.50 and a £5,000 grant for homeowners to replace gas boilers with low-carbon heat pumps have also been promised already.
Yet people are anxious. Fidelity International research found three fifths of the UK’s voters expect to be worried about their finances after today’s Budget statement. Three quarters of those with concerns are worried about the cost of living increasing, while 53 per cent are concerned over inflation and 50 per cent about the outlook for the UK economy as a whole.
Consumer price inflation rose 2.9 per cent in September and economists expect that to rise by more than 4 per cent by the end of the year, eating into their purchasing power. While higher minimum wages were cautiously welcomed, economists were quick to point out the rise would be swiftly countered by rising prices and would do little to make up for the loss of the Government’s emergency £20 a week uplift in universal credit payments.
Nye Cominetti, senior economist at the Resolution Foundation, warned: “The high headline increase would in fact be a smaller real rise than some recent years, given that inflation is likely to be over 4 per cent by April 2022. Importantly, it will not remotely compensate for the £20 a week cut to universal credit.”
Resolution’s analysis suggests most national living wage workers receiving universal credit will lose over 60 per cent of any rise in wages to the taper in the benefit. Mr Cominetti added: “More importantly, there are 4.4 million families who have lost from the cut to universal credit, compared to 2 million workers on the national living wage. With the universal credit cut having already hit incomes hard, and the national living wage rise over five months away, there will be little protection for low income families from the cost of living crisis facing them this winter.”
The Federation of Small Businesses warned the cocktail of tax rises already on the table will add to inflationary pressure and cause firms to put the brakes on hiring and discourage investment.
A third of employers told the FSB they will be forced to increase prices due to these changes, with a quarter adding they will also cut their own compensation, 17 per cent saying they will recruit less and 16 per cent planning to scale back investment. The Confederation of British Industry meanwhile, warned government against new business tax rises “or face dampening the economic recovery and undermining its broader strategy”.
The CBI director general Tony Danker said the Government is “betting the shop” on private sector investment but not doing what it takes to attract it.
“There is a fundamental inconsistency where the Government wants to unlock business investment, but its tax policies do the opposite. You cannot will the ends and ignore the means to turbocharge the economy. Every economist and business leader knows it. This is the Government’s first Spending Review since the pandemic hit and Brexit kicked in. It must choose: are we going for growth? Or going back to tax and spend?”Internet Explorer Channel Network