Hunt defends ‘transformative’ budget amid £1bn tax giveaway to the rich
Eremy Hunt has defended his budget plan to get people back to work amid allegations that it would hand some of the country’s richest people a massive £1billion tax gift.
The Chancellor said the measures he laid out in the House of Commons on Wednesday would have a “transformative” impact on the economy and alleviate labor shortages that have been holding back growth.
This includes a significant increase in access to state-funded childcare, aimed at removing one of the key barriers preventing parents from returning to work – a move that has been widely welcomed.
But there has been controversy over a tax break to discourage an estimated 15,000 high earners from leaving the labor market early, including the abolition of the £1.07million lifetime pension supplement.
Labor said it was the “wrong priority” and they would try to force a vote on it in the House of Commons next week.
The measure is primarily aimed at NHS advisers who have left the health service because they say pension rules make it not worthwhile for them to continue.
However, it has been heavily criticized as the think tank Resolution Foundation (RF) said it was “enormously wasteful” and cost around £47,000 a job.
It said a tax giveaway of this magnitude could result in some workers opting to take early retirement or use their now-uncapped pension savings to avoid inheritance tax.
“It’s a big win for NHS advisors but bad value for money for the UK,” said RF chief executive Torsten Bell.
Appearing on ITV’s Peston show, Mr Hunt insisted he was “systematically” removing barriers to work while the government spent five times as much on childcare cost support.
“So that’s one of the big things that corporate organizations like CBI have been asking for, and that’s a transformative shift for our economy,” he said
“Because after the Brexit referendum, there was a decision by the country that we are not going to fill our vacancies from unlimited low-skilled migration, and so we are going about it without doing that.”
Meanwhile, unions complained he had found £6billion to freeze fuel taxes again and refused to raise extra money for public sector workers seeking cost-of-living wage increases.
There was also uneasiness among some Conservative MPs over his decision to go ahead with a planned increase in corporate tax – from 19% to 25% – although he softened the blow with a three-year temporary hiatus to allow investment in plant and machinery to be written off the tax .
Mr Hunt said it would make Britain the “most attractive investment environment in the world” for the next three years and he was determined to make it permanent as soon as possible.
However, he refused to commit to tax cuts before the next general election, which is expected to be held in just over a year.
“My job is to do the right thing for the economy and then people will see that they can trust the Conservatives to make the economy grow. That’s the voting dividend. I’m not interested in playing games,” he said.
The Office for Budget Responsibility – the official forecaster – while no longer forecasting the UK will fall into recession this year, warned the country is still facing the biggest drop in living standards on record.
Paul Johnson, director of the Institute for Fiscal Studies, said it was a “political decision” by Chancellor Merkel to freeze fuel taxes rather than fund wage premiums for striking nurses and teachers.
He warned households were facing an “enormously difficult” period as a series of large tax hikes for individuals were to come into effect next month.
The freeze on income tax thresholds, announced by Mr Hunt in the Autumn Statement in November, means base rate taxpayers will pay an extra £500 in 2023-24, while higher rate taxpayers will pay an extra £1,000.
“These tax hikes may be necessary from a fiscal perspective, but they’re an important part of why household incomes are still projected to fall more than ever in the current two years,” he said.
https://www.standard.co.uk/business/business-news/hunt-defends-transformational-budget-amid-ps1bn-tax-giveaway-for-wealthy-b1067667.html Hunt defends ‘transformative’ budget amid £1bn tax giveaway to the rich