‘Sugar rush’ budget won’t deliver sustainable growth and means lasting inequality, says IPPR
IPPR researchers have reacted to today’s emergency energy policy announcement.
IPPR executive director Carys Roberts said:
“Today’s budget fails to address most of the biggest challenges facing the UK right now. The tax cuts announced will turbo-charge inequality and will mean growth for the incomes and wealth of the richest, while leaving public services on an unsustainable footing.
“By vastly expanding government borrowing for no clear economic gain, it will only reduce the scope for the investment our economy really needs – in health, education and skills, alongside our drive to reach net zero. Meanwhile it does nothing to help those struggling in the face of soaring prices, who need further support beyond the energy price cap.
“Cutting a whole string of different taxes may provide a rapid sugar rush of immediate growth but this will quickly fade away. These are the wrong policies to drive broadly-shared and sustainable growth.”
On the government’s visions for growth Dr George Dibb, head of the Centre for Economic Justice at IPPR, said:
“The Chancellor’s message is that if the economy is growing we don’t need to worry about inequality or who benefits from that growth. But this is wrong and a continuation of years of policies that have been proven to fail.
“Tax cuts for the highest earners and profitable companies might provide a short-lived economic boost but the hangover will be a continuation of the past decade of stagnant investment, growth, and wages. We’ve been cutting the headline rate of corporation tax for 15 years and it has failed on its own terms - we now have the lowest business investment in the G7.
“Instead of squandering tens of billions on tax cuts, the chancellor should be investing in the productive capacity of the economy, and in unlocking green investment opportunities."
On expanding borrowing to pay for tax cuts Carsten Jung, IPPR senior economist, said:
“There was room for the government to borrow more. But the size of the deficit, fuelled by tax cuts averaging £29 billion annually over the next five years, risks super-charging inflation. Worse, large spending pressures are coming down the line, with public services desperately needing cash injections just to stand still in the face of high inflation. Households too will need further cost of living support. The Chancellor should have strengthened the tax base to tackle these challenges, but he has chosen to erode it.
“This severely limits the Chancellor’s room for action. It will likely mean not fixing childcare, not fixing social care, not fixing education, and not investing in net zero.”
On Rachel Statham, IPPR associate director for work and the welfare state, said:
“The chancellor spoke today to his ambition to make work pay. Instead of action to reduce the spiralling childcare costs that leave parents worse off for going out to work, his plan is to ratchet up punitive conditionality on in-work benefits – an approach that has already demonstrably failed to get people into good jobs over the long term. This budget revealed a government staggeringly out of touch with the lives of people struggling to get on in work across the country, and with too little to offer them.”
On stamp duty cuts Shreya Nanda, IPPR economist, said:
“If the Chancellor is serious about taking on vested interests to increase growth, he is missing a trick by just fiddling around the edges with stamp duty. Instead, he should scrap it and replacing it with a proportional property tax. This would boost efficiency and fairness in the property market.”
Available for interview are:
- Dr George Dibb, head of IPPR’s Centre for Economic Justice
- Rachel Statham, associate director for work and the welfare state at IPPR
- Carsten Jung, IPPR senior economist
- Shreya Nanda, economist at IPPR
David Wastell, director of news and communications: 07921 403651 [email protected]
Liam Evans, senior digital and media officer, 07419 365 334 [email protected]