Autumn Statement 2023

Baroness Meacher Excerpts

Wednesday 29th November 2023 Lords Chamber

[Baroness Meacher (CB)]

My Lords, I, too, welcome the Minister to her new role on the Front Bench. I will speak briefly to express my concern about the regressive impact of the Autumn Statement on working households. I like and respect Jeremy Hunt and fear that the Autumn Statement reflects the undue influence of the right wing of the Conservative Party at present.

The OBR considered the tax changes of this Government, including those in the Autumn Statement, and concluded that tax as a share of the economy will rise every year to a post-war high of 37.7% of GDP by 2028-29, most of it driven by tax threshold freezes and strong nominal earnings growth, which together hit hard-pressed working families particularly hard. The Institute for Public Policy Research suggests that the national insurance contribution reductions announced in the Autumn Statement will largely benefit the best-off households. For every £100 spent on these cuts, £46 will benefit the richest fifth of households and only £3 of every £100 will go to the worst-off families.

Paul Johnson points out that the tax cuts in the Autumn Statement are funded by the promise of years of very low real-terms increases in public service spending. Of course, these services benefit the poor disproportionately. The Lib Dem Treasury spokesperson described the public services as on their knees after 13 years of Conservative Government. Clearly things are not going to improve.

A very small but highly regressive tax change is that on tobacco products. For me, this small tax change epitomises the unfairness of the Autumn Statement. In general, tobacco taxes will increase by RPI plus 2%. However, duties on hand-rolling tobacco products will increase by RPI plus 12%. These products are overwhelmingly used by low-paid people. Again, they are being penalised.

Finally, as the Minister mentioned, the national living wage will increase by 9.8% to £11.44 an hour from 1 April 2024. This will not compensate for the price inflation and tax changes in recent years. Again, those on low incomes will suffer.