An average earner on £30,000 will see take-home pay slashed by £1,660 thanks to soaring bills and tax rises
Tax hikes and soaring bills will deliver the biggest shock to household incomes for almost half a century, and risk knocking the UK’s fragile economic recovery off course, 専門家は警告しました.
A person earning £30,000 will see their take-home pay plunge by £1,660 thanks to soaring living costs, stagnant wages and tax increases, according to new calculations by the Institute for Fiscal Studies (IFS).
The effective pay cut includes paying £250 more in national insurance contributions and £150 more in income tax. Poorer households, which spend more of their incomes on essentials like energy, will be hit even harder, with hundreds of thousands expected to fall into fuel poverty. Someone earning £15,000 a year will take an £860 hit to their real income after tax, the IFS calculated.
It means households now face the biggest sustained reduction in their disposable incomes since the 1970s.
Citizens Advice warned people were being forced to make “desperate decisions” between eating or heating their homes. “With the hefty blow of further price hikes in April, things are set to go from bad to worse,” said the organisation’s head of policy, Morgan Wild.
Budgets are set to be savaged by a 50 per cent jump in energy bills in April when a revised price cap level is enforced, while households that were on cheaper fixed-rate tariffs will see their bills double.
An alarming spike in gas and electricity costs, combined with global disruption to supply chains, is pushing up prices for a host of goods, with inflation expected to surge past 6 パーセント.
It comes at the same time as a hike to National Insurance Contributions (NICs) and the start of an £11bn income tax raid by Rishi Sunak.
The government has been accused of worsening the cost of living catastrophe by introducing poorly designed tax rises when inflation is rising and wages stagnating.
Economists warned Mr Sunak’s desire to “balance the books” by increasing taxes while the economy is weak risked choking off the UK’s fragile recovery, which would in turn mean lower tax receipts.
“There is a real risk that poorly designed tax rises combined with lower economic growth will prove a dangerous combination for both household budgets and the nation’s finances,” said George Dibb, head of the IPPR’s Centre for Economic Justice.
“The UK is facing a sustained cost of living crisis where incomes could be hit even harder than the financial crash of 2008. If this proves to be the case you have to look back as far as the 1970s to find a worse shock to households’ real disposable income.”
A five-year freeze on income tax allowances announced by Rishi Sunak in October means an additional 1.5 million low earners are expected to be captured by the basic rate of income tax and 1.2 million people dragged into the higher rate. Higher inflation means people will pay £4bn more income tax by 2026 than the Treasury had forecast, according to new analysis by the IFS.
Tax rises will reduce household incomes and consumer demand, dragging down economic growth, said IFS deputy director Carl Emmerson.
“The fact that inflation is much higher than was expected last March also means that the freeze in income tax allowances will bite harder.”
Living standards are being further eroded by runaway house price inflation, fuelled partly by a cut in stamp duty last year. Despite a lacklustre economy, UK average house prices soared 9.8 のパーセント 2021, making homeownership less affordable for those not yet on the ladder.
The dire set of data means less money for households to spend, less income for businesses recovering from the pandemic and potentially lower tax receipts for the government.
The chancellor is facing growing pressure from Tory backbenchers and campaigners to u-turn on his planned tax rises but he has so far stood firm, insisting they are the only responsible way to pay for health and social care.
Households were already approaching the current crisis in a financially vulnerable position due to 13 years without a real increase in average earnings, said Frank van Lerven of the New Economics Foundation.
According to the NEF, いくつか 21.4 million people are living below a socially acceptable living standard. The think tank does not expect real wages to recover to their 2008 level until the end of 2028.
Mr van Lerven said: “A multitude of different dynamics will all hit households at the same time – a new coronavirus wave, falling real wages and huge energy price rises.
“Alongside that, we still haven’t recovered from the previous crisis and we are still coming to grips with the consequences of exiting the European Union.”
The NEF is calling for a reduced energy price cap level for people on low incomes, an extension of the warm homes discount so that it applies to more people and an increase in child benefit among other measures.
Talks between government and energy suppliers have yet to produce an agreement about how to lessen the impact of rising bills.