WBG’s full response to the Spring Budget 2024

Date Posted: Wednesday 13th March 2024

BudgetFiscal PolicyPublic ServicesSocial SecurityTaxationTreasury

In his opening statement in the 2024 Spring Budget, the Chancellor expressed confidence in the UK’s economic trajectory, citing improved confidence in business and a turnaround in inflation and growth. However, this optimistic assessment is a stark contrast with the current economic reality. Recent data from the Office for National Statistics (ONS) revealed that the UK has entered a “technical recession,” with GDP declining in the last two quarters of 2023.

Many people are facing stagnating wages, falling living standards and unprecedented levels of high inflation. Wherever you turn, it is women who bear the brunt of these economic challenges. The Chancellor’s decision to implement further cuts to national insurance contributions (NIC) is expected to exacerbate their financial vulnerability, with women, especially lone mothers, projected to gain the least from these tax cuts. Furthermore, the disproportionate impact of high inflation and interest rates on women, compounded by the inadequacies of current social security measures, underscores the urgent need for gender-responsive policies.

This is why we were disappointed by many of the decisions made in last week’s budget. We argue that NIC cuts were misguided and that a better way to get us onto a path of growth would have been to strengthen the foundations of the economy by investing in public services, alongside implementing a progressive tax system.

Our Analysis and Recommendations

Taxation Policy:

  • National Insurance Contributions (NICs) cuts disproportionately benefit higher-income earners, providing minimal relief for low-income families, especially single mothers.
  • Our impact analysis concluded that, taking together the NICs cut announced in November 2023 and the ones announced in March 2024, single men will gain on average close to £500 more a year than lone mothers. Instead of cuts, we recommend investing in our vital public services.

Social Security Measures:

  • While the threshold increases for High Income Child Benefit Charge (HICBC) are a step in the right direction, concerns persist regarding the implications of household means-testing and the persistent levels of child poverty.
  • WBG recommends the removal of the two-child benefit cap, scrapping No Recourse to Public Funds for new migrants, and restoring universal child benefit to effectively address child poverty and promote financial inclusion.

Public Services Funding:

  • Budgetary constraints and inflationary pressures threaten the sustainability of public services, particularly impacting local governments – this is set to impact women considerably more as they are heavily reliant on these services.
  • We recommend adequately funding local services to support women’s employment opportunities, caregiving responsibilities, and overall well-being.

Ending Non-UK Domiciled Status:

  • The decision to end the non-UK domiciled status is welcomed as a step towards closing tax loopholes and promoting tax fairness. However, it is a missed opportunity to stimulate domestic investment and foster sustainable economic growth.
  • We recommend that future initiatives should address wealth inequality and promote inclusive economic development alongside tax reforms.