WBG’s response to the mini-budget announcement on 23 September 2022

Tax cuts put money in the wallets of wealthy men while failing those hit hardest by the cost of living crisis

WBG analysis of the announcements made by the Chancellor, Kwasi Kwarteng, shows that:

• Around 80% of those who benefit from the nearly £2.4bn a year spent cutting the 45% tax rate will be men.
• 77% of workers who earn too little to pay income tax, so will gain nothing from the nearly £5.3bn a year spent cutting the basic rate, are women.
• Men also gain more from the £16bn a year spent reversing the NICs increase (£292 per year versus £262 per year for women). The largest beneficiaries will be high-income households, with an average yearly income increase of £1,059. Lower-income households will only have £12 more each year on average. Those earning below the NICs threshold, not in employment, or pensioners will not experience any income increase as a consequence of this measure.
• Cancelling the planned corporation tax rise (from 19% to 25%) will cost £18.7bn a year by 2026/27. This will largely benefit men, who are more likely to be business owners and shareholders.

Speaking in response to the budget Women’s Budget Group Director, Dr Mary-Ann Stephenson said today:

“Far from putting more money in people’s pockets, the nearly £45bn a year of tax cuts announced today by Chancellor Kwasi Kwarteng won’t help those hit hardest by the cost of living. These tax cuts benefit the already wealthy – mainly men – while people who are low-paid, or out of the labour market – mainly poor women – are left behind

Public services

Our public services are on their knees after a decade of austerity and the Covid pandemic. Record backlogs, A&E and ambulance waiting times in our NHS, millions of people with unmet care needs, a recruitment and retention crisis in our social care, schools are struggling with soaring prices, and public sector wages are rising slower than the private sector. The Government has chosen to prioritise tax cuts over the urgent investment needed in our social infrastructure such as health, education and care services.

Universal credit changes

Plans to cut benefits of low earners if they can’t increase their working hours will hit women with caring responsibilities and disabled people. These groups are among those suffering most from rising cost of living. People – mainly women – who work under 15 hours a week do so because of caring responsibilities, ill-health or disability. Investment in care services, flexible working and a change in employer attitudes rather than punitive policies are needed

Housing

Spiralling housing costs are an underlying cause of the cost of living crisis but cutting  stamp duty to address the housing unaffordability crisis is misguided. It will have little effect on home ownership or affordability overall. Rather, it will likely lead to further house price inflation.

Green investment

The budget failed to address green investment at a time it is greatly needed. Instead, oil and gas companies continue to make record profits while families struggle to heat their homes. A much higher windfall tax could be used to deliver a faster climate transition by accelerating the rollout of retrofitting and improve energy efficiency of our homes and commercial buildings.

Enterprise zones

The proposal to create low-tax enterprise zones is unlikely to generate the jobs investment and economic prosperity promised.  Previous studies show that enterprise zones do not generate a substantial number of new jobs. In 2011 the HM Treasury estimated that enterprise zones would create 54,000 new jobs by 2014. However, between 2012 and 2017, 17,500 jobs were created in the 24 enterprise zones, 32% of the expected impact. The jobs created were mainly low-skilled, showing that this policy could not transform the economic activity of the selected regions. Furthermore, the lack of a national system of regulation of trade creates a risk of criminality and illicit activities in freeports.

Trade Unions

At a time when incomes are in crisis, limiting strike action to defend pay and conditions can leave workers in untenable positions. These restrictions are unworkable in a sustainable economy and only serve to hurt working people.

— ENDS —

About the Women’s Budget Group

The Women’s Budget Group is an independent network of leading academic researchers, policy experts and campaigners. Our vision is of a caring economy that promotes equality between women and men.

For more information or further comment, contact

maryann.stephenson@wbg.org.uk 07957 338582

sara.reis@wbg.org.uk

^[1] J. De Henau & S. Himmelweit (2020) A Care-Led Recovery from Coronavirus. Women’s Budget Group.

^[2] C. Oyvat & O. Onaran (2021), Tax wealth and profit income to fund social care and healthcare. Women’s Budget Group

^[3] https://www.taxjustice.uk/blog/44bn-a-year-could-be-raised-from-higher-tax-on-oil-and-gas-prof