Budget ‘hasn’t really moved us any closer to where we need to be’, says IEA Executive Director
6 March 2024
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Lifestyle Economics
Energy and Environment
Andy Mayer writes for The Telegraph
7 March 2024
Housing and Planning
Commenting on the Budget, Tom Clougherty, Executive Director of the free market think tank, the Institute of Economic Affairs, said:
“Today’s Budget tax cuts will provide some relief from the rising cost of living, but ultimately won’t do much to revive the stagnating economy that lies behind most of our current woes.
“There is a strong fairness argument for the National Insurance reduction, which will partially offset the impact of frozen tax thresholds. And the long-term ambition to abolish National Insurance and simplify the way we tax earnings is a very welcome one – even if it doesn’t seem likely to come to fruition.
“The Chancellor’s changes to child benefit also went some way towards reducing the harm done by his predecessors. A more radical overhaul – including the planned shift to a household basis – can’t come soon enough.
“Cutting capital gains tax on residential properties is fine as far as it goes. But abolishing Stamp Duty Land Tax – or at least raising the threshold for homes to £1m – would have been a far better way to improve the UK’s antiquated and destructive property tax regime.
“This Budget didn’t really address the UK’s long-term fiscal challenges, particularly around the impact of an ageing population. On the other hand, it did highlight the absurdity of setting tax policy based on highly variable five-year debt forecasts. Fiscal rules should be a good thing, but the way we’re using them makes no sense at all.
“There’s no getting away from the fact that raising living standards in the long run depends on generating faster economic growth. And that means prioritising tax reforms with genuine pro-growth impact, fixing our broken planning system so that we can build more of everything, and accepting that we need to couple spending restraint with major reforms to public services.
“As always, there are good and bad things in this Budget. But if we take a broader view of economic policy, it hasn’t really moved us any closer to where we need to be.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“Today’s Budget tax cuts will provide some relief from the rising cost of living, but ultimately won’t do much to revive the stagnating economy that lies behind most of our current woes.
“There is a strong fairness argument for the National Insurance reduction, which will partially offset the impact of frozen tax thresholds. And the long-term ambition to abolish National Insurance and simplify the way we tax earnings is a very welcome one – even if it doesn’t seem likely to come to fruition.
“The Chancellor’s changes to child benefit also went some way towards reducing the harm done by his predecessors. A more radical overhaul – including the planned shift to a household basis – can’t come soon enough.
“Cutting capital gains tax on residential properties is fine as far as it goes. But abolishing Stamp Duty Land Tax – or at least raising the threshold for homes to £1m – would have been a far better way to improve the UK’s antiquated and destructive property tax regime.
“This Budget didn’t really address the UK’s long-term fiscal challenges, particularly around the impact of an ageing population. On the other hand, it did highlight the absurdity of setting tax policy based on highly variable five-year debt forecasts. Fiscal rules should be a good thing, but the way we’re using them makes no sense at all.
“There’s no getting away from the fact that raising living standards in the long run depends on generating faster economic growth. And that means prioritising tax reforms with genuine pro-growth impact, fixing our broken planning system so that we can build more of everything, and accepting that we need to couple spending restraint with major reforms to public services.
“As always, there are good and bad things in this Budget. But if we take a broader view of economic policy, it hasn’t really moved us any closer to where we need to be.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
- Tom wrote in The Times earlier this week previewing the Chancellor’s options ahead of the Budget and setting out the case for a Stamp Duty cut: It is time to stamp down on stamp duties.
- IEA Head of Lifestyle Economics Christopher Snowdon responded to the vape tax by describing it as ‘scientifically and economically illiterate’.
- IEA Economics Fellow Julian Jessop wrote in City AM last week, stating that “the UK’s economic problems clearly run deep, and tax cuts alone will not fix them”: Britain needs to grow up – and have real conversations about the economy.
- IEA Director of Public Policy and Communications Matthew Lesh has written new research arguing that red tape has caused significant spikes in the costs of energy, housing, and childcare: Graphic Content: How red tape is fuelling the cost of living crisis.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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