Autumn Budget: tax
Households face £3,000 tax hit says think tank
Number crunching: Rishi Sunak has promised lower taxes
Households will be paying £3,000 more in taxes by 2027 as a result of policies pursued since Boris Johnson became Prime Minister, according to a think tank.
Analysis by the Resolution Foundation shows that the Chancellor has set the stage for a new high tax economy – rather than the high wage, low tax one favoured by many Conservative MPs.
The Foundation said that despite a spending spree announced in the Budget, real wages would fall again next year and that the UK is “still in the midst of its weakest decade for pay growth since the 1930s”.
Faster than expected growth gave Rishi Sunak room to boost spending across government departments by £150 billion.
However, the Resolution Foundation said that rising inflation would erode wage growth compounded by rising energy prices.
The think tank’s analysis showed that in 2026/27 tax as a share of the economy will be at its highest level since 1950 – £3,000 a household higher since 2019 when Mr Johnson moved into Downing Street.
It said: “The combined impact of policies announced by the Chancellor will deliver a 2.8% income boost to the poorest fifth of households by the middle of the decade, but an income hit of 2% to middle income households and a 3.1% hit to the richest fifth of households.”
Following his declared “mission” to cut taxes by the end of this parliament, Mr Sunak told Conservative MPs after the Budget that he planned to use “every marginal pound” to lower taxes.
But his plans were questioned by Torsten Bell, the Resolution Foundation’s chief executive, who said: “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.”
Rachel Reeves, Labour’s Shadow Chancellor, said: “Revelations from yesterday’s Budget that taxes will be £3,000 more per household than when Boris Johnson became Prime Minister are staggering.
“This is a Budget hammering working people while giving bank a tax cut.
“The Tories have no plan to tackle the cost of living crisis, no plan to shift the unfair taxes they’ve hit working people with and no plan for growth.
“This was an out of touch, high tax, low growth Budget from a Conservative government that would rather waste billions of pounds of taxpayer cash than give households a VAT cut on their heating bills heading into winter.
“Labour would tax fairly, spend wisely, and grow our economy with our Climate Investment Pledge and plan to buy, make and sell more in Britain.”