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Rachel Reeves is “quietly hammering” workers with stealth taxes as a result of her budget last year, a thinktank has said.
While the chancellor did not increase income tax, national insurance contributions for employees or VAT, avoiding a manifesto breach, her November statement did see her extend a freeze on the first two until 2031.
It means people face being dragged into paying higher rates as their wages rise over time.
The Treasury has defended the policy as “fair and necessary”. It’s expected to raise £23bn in 2030-31 to help the government “deliver on the country’s priorities” like cutting NHS waiting lists and debt.
Sir Keir Starmer has promised people will “feel positive change” in their pockets this year.
According to the Centre for Policy Studies (CPS), someone earning £50,000 today will be £505 worse off in real terms come 2031 despite their salary being forecast to increase by more than £6,000.
On the flip side, pensioners and those on welfare are set to be better off.
Thanks to the triple lock guaranteeing increases in line with inflation, earnings or 2.5%, whichever is higher, a pensioner could expect to be at least £306 better off in real terms in 2030-31.
If people relying on the state pension are exempted from paying income tax even once the payment crosses the personal allowance threshold, they could be £537 better off.
And increases to the standard rate of universal credit will mean someone on unemployment benefits will be £290 better off.
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The CPS…
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