Centre for Policy Studies
Robert Colvile, Director –
“It takes a rare political gift to steal shamelessly from both Nigel Lawson and Gordon Brown – but Rishi Sunak managed it. His speech promised to be fiscally prudent, cut borrowing and support business – but was also packed with generous promises on spending and praise for the power of government investment.
“It is absolutely right to make a tax cut for the working poor the centrepiece of the Budget, and we are grateful to the Chancellor for crediting the CPS, among others, for its work on this. But if we are to get long-term growth rates above the 1.3% and 1.6% predicted, we need to stop raising taxes and do more to encourage enterprise – for example by making cuts to business rates and incentives for investment permanent rather than temporary.”
Institute of Economic Affairs
Mark Littlewood, Director General –
“Overall, this was another high spending Budget from a government which continues to use most of its available headroom to increase expenditure rather than to cut taxes. The eye-watering national debt will continue to grow in cash terms – even if it falls modestly as a proportion of national income – because there is no plan to run a budget surplus in the coming years.
“There were some positive elements to the Budget. Reducing the universal credit taper rate will result in many people keeping more of what they earn and will help to incentivise work. The wide-ranging reform to alcohol duties is a very welcome step in rationalising and simplifying this part of the tax code. But in other areas, the Chancellor has made our over-complicated tax rulebook still more impenetrable.
“His new Charter for Budget Responsibility sounds good – but one wonders whether it will be abandoned at the first sign of political difficulty, which has been the fate of previous fiscal rules of this type.
“The Chancellor is banking on strong economic growth to sustain the many additional billions of pounds of spending he has pledged. However, in the absence of meaningful tax cuts and deregulation, and with state spending as a share of GDP at near record-levels, it is entirely possible that our post-Covid recovery will be rather more sluggish than the OBR’s upbeat numbers would indicate.”
Adam Smith Institute
Daniel Pryor, Head of Programmes –
“This high-tax, big-spending budget is largely bankrupt of inspired policy.
The Conservatives seem to be out of new ideas, instead sticking to the tired old ‘tax and spend’ playbook. Where they see a problem, they reach for your wallet. Housing crisis? Tax developers while watering down planning reform. Social care? Hike up taxes and ignore the red tape.
The Chancellor says he wants a more innovative, high productivity economy but is increasing corporate tax rates that will discourage investment. He says that he wants work to pay but is increasing National Insurance. The new fiscal rules at least signal some interest in controlling public spending, though are conveniently the same metrics the Government is already on track to meet.
There are welcome reforms to tackle increases in the cost of living and working, including on the Universal Credit taper rate, reductions in duties on alcohol, and business rates reform. All of these will help the worst off in society and the hardest hit industries following the pandemic. At the same time, we’ll need cheaper pints to cope with the rest of our eye watering tax burden.”
John O’Connell, Chief Executive –
“Some concrete wins for taxpayers can’t hide the massive spending pledges eating up our fiscal headroom.
“Cuts to business rates, alcohol duties and a cancellation of planned fuel duty hikes will all be welcome news for families and entrepreneurs struggling under a historic high tax burden, which overall will continue to grow.
“But as the chancellor reeled off one huge spending pledge after another, many taxpayers will be left wondering why there was no mention of saving money and eradicating waste elsewhere to pay for it all.
“Targeted tax cuts with more responsible spending would have delivered a much stronger boost to growth while giving much-needed respite to taxpayers and businesses under the cosh.”
The Entrepreneurs Network
Sam Dumitriu, Research Director –
“This is a necessary and overdue change. While generous by international standards, the R&D Tax Credit has become outdated and out-of-touch with the way innovation works in tech. Research and development in AI and machine learning is reliant on access to data and cloud computing power. If startups can’t claim these costs as R&D spending, they are put at a disadvantage relative to tech giants who have masses of user data and large servers.
“When we first called for reform in our Startup Manifesto written in partnership with startup lobby group Coadec in 2019, over 250 of Britain’s leading entrepreneurs backed our call. I suspect many won’t be waiting till the alcohol duty reforms come in next April to uncork the bubbly.”
Centre for Social Justice
Andy Cook, CEO –
“Work is the best route out of poverty. The CSJ first conceived Universal Credit to make work pay, so it is fantastic to see the Chancellor cut the taper rate from 63p to 55p, in line with our original design. This simple but radical step will allow working families to keep more of their hard earned cash.”
Joseph Rowntree Foundation
Katie Schmuecker, Deputy Director of Policy & Partnerships –
“This is a tale of two Budgets for families on low incomes. For those in work, the change to the taper rate and work allowance, alongside the National Living Wage increase, are very positive steps, allowing low-paid workers to keep more of what they earn. Together these measures improve our social security system for working families and demonstrate a serious intent to turn the tide on the pre-pandemic trend of rising in-work poverty.
“But the reality is that millions of people who are unable to work or looking for work will not benefit from these changes. The Chancellor’s decision to ignore them today as the cost of living rises risks deepening poverty among this group, who now have the lowest main rate of out-of-work support in real terms since around 1990.
“Among the people in our society who cannot work are cancer patients, people with disabilities and those caring for young children or elderly parents. Their energy bills and weekly shop are going up like everyone else’s and they face immediate hardship, hunger and debt in the months ahead. The Chancellor had an opportunity to support families on the lowest incomes to weather the storm ahead, and he did not take it.”
Torsten Bell, Chief Executive of the Resolution Foundation –
“The Chancellor yesterday got his first chance to set out what the UK’s post-pandemic economy might look like by the mid-2020s. It is not the high wage economy envisaged by the Prime Minister last month, or even the lower tax economy that Rishi Sunak said was his goal yesterday. Instead the Chancellor has set out plans for a new high tax, big state economy.
“Higher taxes aren’t a surprise given the UK is combining fiscal conservatism with an ageing society and a slow growing economy. But it is the end of low tax conservatism, with the tax take rising by £3,000 per household by the middle of this decade.
“While tax revenues and NHS spending will be growing rapidly in this economy, growth in pay packets and family incomes looks far more anaemic – a huge challenge that the welcome rise in the National Living Wage and boost to Universal Credit eased, but did not overcome.
“With Britain still getting to grips with the impact of Covid, Brexit and the Net Zero transition over the coming decade, the country remains in need of an economic strategy that steers us through this period of huge economic change while addressing long standing challenges of low productivity and high inequality.”
Ryan Shorthouse, Chief Executive of Bright Blue –
“Finally, Boris’s boosterism has defeated Treasury orthodoxy. This is a very different Conservative Government to the ones in the last decade – choosing, as the Chancellor proclaimed, to invest rather than retrench. Today was the definitive farewell to the age of austerity. Really, we are returning to the New Labour days – Brexit Blairism, if you like.
“The economy is in an impressively and reassuringly better condition after the worst of Covid than what was forecast and feared, not least because of the unprecedented and successful measures the Treasury put in place to protect livelihoods, particularly the furlough scheme.
“The positive economic projections, alongside significant tax rises, enables this Government to both commit to significant real terms increases across all departments and public services over this spending period, and to achieve a current budget surplus by the end of this parliament.
“However, there is a lot of economic uncertainty, thanks to the capriciousness of Covid, the bureaucracy from Brexit, and the spectre of rising inflation. The cost of servicing the public debt remains very low, but there is a chance of changes to inflation and interest rates which would significantly undermine the sustainability of this. Increased bills and taxes also threaten real household disposable income, already projected on average to be growing annually at dismally low levels. The Chancellor’s new age of optimism could well be short-lived…”