Revealed: Autumn Statement tax cuts benefit London & South East, with the richest fifth of households taking almost half

IPPR analysis of the Autumn Statement tax measures has revealed that the much-trumpeted cuts to National Insurance contributions largely benefit the best-off households.

Gains made by those in work – employed and self-employed – from the changes announced today are no solution to increases in the cost of living, which disproportionately hit those on low incomes.

For every £100 Jeremy Hunt spent on personal tax cuts, £46 will benefit the richest fifth of households. Only £3 of every £100 of tax cuts will go to the worst-off families.

Source: IPPR analysis using IPPR tax-benefit model and Family Resources Survey 2019/20 – 2021/22

IPPR analysis has also uncovered where in the UK will see the biggest gain from reductions in National Insurance. London and the South East of England are the biggest winners with an average annual gain per working age person of £316 and £290 respectively. Those in the North East, Yorkshire and the Humber, and Wales see the smallest benefit, with average gains of £192, £214, and £211 respectively.

Source: IPPR analysis using IPPR tax-benefit model and Family Resources Survey 2019/20 – 2021/22

Ultimately, the benefits of a reduction in National Insurance will, for many, pale into insignificance compared to the rise in costs of food and energy over recent months.

• An employee with an average salary of £26,300 will see an increase in weekly income of just £5.26
• Someone better off on a salary of £39,800 will benefit to the extent of £10.47 per week
• For a self-employed person on an income of £35,000, the weekly gain will be £8

Source: IPPR analysis, using 2022/23 HMRC earner statistics

Henry Parkes, principal economist and head of quantitative research at IPPR, said:

“There are many reasons why now is not the time for tax cuts; but even less so when the principal beneficiaries of today’s changes will be the best off households, rather than those worst hit by the continuing cost-of-living crisis. They also disproportionately benefit the richest areas of the country most – the opposite of levelling up.

“More broadly these tax cuts are accompanied by plans to make deep cuts in public services and investment in the future - an approach that commands very little support from the public and will make it harder, not easier, for the UK economy to grow as it needs to.”

ENDS

AVAILABLE FOR INTERVIEW

Henry Parkes and Dr George Dibb, head of IPPR's Centre for Economic Justice, are available for interview.

CONTACT

David Wastell, Director of News and Communications: 07921 403651 d.wastell@ippr.org

Liam Evans, Senior Digital and Media Officer: 07419 365334 l.evans@ippr.org

NOTES TO EDITORS

• Regional distribution of NIC cuts announced today (Source: IPPR analysis using IPPR tax-benefit model and Family Resources Survey 2019/20 – 2021/22):

• IPPR, the Institute for Public Policy Research, is an independent charity working towards a fairer, greener, and more prosperous society. We are researchers, communicators, and policy experts creating tangible progressive change, and turning bold ideas into common sense realities. Working across the UK, IPPR, IPPR North, and IPPR Scotland are deeply connected to the people of our nations and regions, and the issues our communities face.