Press Story

Today's tax cuts imply unfeasible and undesirable public spending cuts in the future

IPPR has reacted to measures announced in today’s autumn statement by Jeremy Hunt, the chancellor of the exchequer.

Harry Quilter-Pinner, IPPR director of policy and politics, said:

“Today’s slash-and-crash budget put politics before the needs of the nation. No one believes that future cuts to day-to-day spending are possible, or that squeezing public investment further is sensible, yet the government chose to slash taxes today at the expense of crashing public services tomorrow. With the NHS, pensions, childcare and defense spending likely to be protected, future spending plans imply big cuts across other key public services. This isn’t fiscally responsible, economically desirable nor politically popular.

“The Chancellor has once again missed an opportunity to show that the government has a real plan to tackle the issues facing our nation. Growth remains low, people are struggling to pay the bills and our public services are crumbling. Yet today’s budget had few real answers to these pressing problems. We desperately need a real plan for shared economic growth, investment in our economy and net zero, and properly funded public services, supported by progressive tax reform.”

On the economy, Dr George Dibb, associate director for economic policy at IPPR, said:

“This is a budget that shows an obsession with cutting taxes today at the expense of vital public services tomorrow. Cutting National Insurance Contributions is not the right priority right now, with almost with almost 50p of every £1 this costs going to the richest fifth of households, and just 3 per cent going to the poorest fifth.

“The only upside of this budget are the reforms to the tax system that don't hit working families but raise more revenue from the wealthiest, as IPPR has long argued for. Reforming the non-dom tax system, higher tax on holiday rentals, and a further levy on first-class air travel are first steps that show how the government could find more resources for better public services from those most able to support this. Disappointingly, that’s set against backward steps such as cuts to capital gains tax and a freeze to fuel duty.

“The real burdens that we face as a society are poor health, unequal wealth, squandered economic opportunities, and confronting the climate crisis - all adding up to total economic stagnation. Fairer taxes would provide the remedy for these.”

On health, Chris Thomas, head of IPPR's Commission on Health and Prosperity and principal health fellow, said:

"The UK is the literal sick man of Europe, with poor health one of the greatest fiscal threats we face. With nearly three million out of work because of sickness, we urgently needed a coherent strategy to deliver health and prosperity. What we got was incoherent, and no match for the scale of the challenge we face.

“The Chancellor is right that the NHS needs reform to increase productivity. But the idea today’s announcement will get us there is fantasy. The money announced is barely enough to keep NHS funding from falling – at a time every light in the service is flashing red, and reduced investment in a crumbling estate and in primary care is undermining productivity.

“Increasing tobacco taxes is an excellent way to reduce the health consequences of one of the only products that kills you when used as intended. But many will be baffled to see this combined with an alcohol duty freeze - at a time alcohol deaths are at the highest level on record.

“It’s uncertain that a vape tax will have any health benefit – it may even cause harm by reducing their appeal to current smokers. Marketing restrictions are the best way to address vaping among children.”

On child benefit moving to a household system from 2026 with a higher threshold and taper, Melanie Wilkes, IPPR associate director for work and the welfare state, said:

“This is a welcome and common-sense move to ease the financial pressures on parents grappling with rising mortgage rates and food costs, and puts an end to steep tax rates on ordinary families. But with child poverty persistently high, these measures should be coupled with stronger action to support those on the lowest incomes.”

On childcare, Melanie Wilkes said:

“Today’s guarantee of childcare rates will offer welcome certainty for providers and parents ahead of an expansion in free hours this spring. But many families – particularly those on low incomes – still struggle to access high quality and inclusive childcare provision where they live. We need to work towards an early education system that tackles disadvantage and supports all children to get the best start in life.”

On transport, Maya Singer-Hobbs, IPPR senior research fellow, said:

“The Chancellor spoke of helping families in the long term but decided to lock them into unaffordable transport costs. Maintaining the fuel duty freeze for another year at a cost of £5bn does nothing to help those who do not drive, who are likely to be on the lowest income, and disproportionately benefits the wealthiest drivers.

“If the average driver is £50 better off at the end of this year as a result of this, the lowest earning motorists see a fraction of this benefit - just £22 according to the Social Market Foundation.

“Our own analysis found that drivers on the lowest income are spending more than a fifth of their income on running a car. The fuel duty freeze is just tinkering around the edges of the costs our transport system places on households. It also drives up carbon dioxide emissions and makes meeting our climate commitments even harder.

“This budget has been a missed opportunity to invest in affordable alternatives to driving, despite the huge appetite across the country for investment in public transport and desire from many to travel more actively.”

ENDS

Harry Quilter Pinner, Dr George Dibb, Melanie Wilkes and Chris Thomas are available for interview

CONTACT

David Wastell, Director of News and Communications: 07921 403651 d.wastell@ippr.org

Liam Evans, Senior Digital and Media Officer: 07419 365334 l.evans@ippr.org

NOTES TO EDITORS

IPPR (the Institute for Public Policy Research) is an independent charity working towards a fairer, greener, and more prosperous society. We are researchers, communicators, and policy experts creating tangible progressive change, and turning bold ideas into common sense realities. Working across the UK, IPPR, IPPR North, and IPPR Scotland are deeply connected to the people of our nations and regions, and the issues our communities face. We have helped shape national conversations and progressive policy change for more than 30 years. From making the early case for the minimum wage and tackling regional inequality, to proposing a windfall tax on energy companies, IPPR’s research and policy work has put forward practical solutions for the crises facing society. www.ippr.org