Chris Elmore, MP for Ogmore, has slammed the UK Tory Government for giving tax breaks to the richest 1% whilst effectively increasing the Basic Rate of Income tax by 4p via fiscal drag.
During the Budget, despite all the Chancellor’s claims, the OBR downgraded the UK’s long-term growth forecasts, with downgrades in all the last three years of the forecast period. They have confirmed that the UK will be the weakest economy in the G7 this year, the only country that will see negative growth and that the economy will continue to be weaker than before the pandemic.
Livings standards, according to the OBR, have been hit by the largest amount since comparable records began. The average French family is now a tenth richer than their British counterparts, whilst the average German family is a fifth richer.
The only permanent tax cut in the budget was a £1bn tax cut for the richest 1% of earners, via changes to pensions allowances.
A high earner with a £2 million pension pot will get a tax cut of £275k when they take their tax free lump sum.
The measure will cost the taxpayer £70k for every person returned to the labour market.
Experts say it could have the opposite effect to what the government claimed. Former Coalition Pensions Minister Steve Webb says it could lead to people retiring earlier. Experts also note that the change could add another loophole that allows the wealthiest to avoid inheritance tax.
Compared to their forecast in 2021, the OBR now thinks that average interest rates on outstanding mortgages will be twice as high. This Tory mortgage penalty has hit £1,950 for a typical household remortgaging.
Chris Elmore, MP for Ogmore, said:
“Giving a £1 billion tax cut to the richest 1% whilst stealthily hiking the Basic Rate of Income Tax by 4p is nothing short of scandalous. The cost of living crisis is biting hard right now and the UK Tory Government has no solutions. They are only focussed on overseeing disorganised decline in the UK.
The Liz Truss Tory Government ensured mortgage holders are hit with a £1,950 penalty for a typical household remortgage. This has only been made worse by the continued drive for a low-growth, low-investment mantra that the Prime Minister and Chancellor are addicted to. These pressures have ensured an average family is poorer than their French and German counterparts and living standards will continue to slide.
It doesn’t have to be this way. The next UK Labour Government is ambitious for our country. We will secure the highest sustained growth in the G7 and which will drive up living standards and cut the cost of living.”