Response to the Autumn Statement
The Chancellor of the Exchequer has delivered the Autumn Statement with the aim of 'growing the economy' and 'making work pay'.
Despite the reductions to tax announced in today’s Autumn Statement, total tax revenue as a share of GDP remains to reach its highest level since the 1940s. This is due to the freezing of tax thresholds and high inflation which means that many more families are being pushed into paying tax and increasingly the high rate of tax.
A reduction of NI and an increase in minimum wage is welcome but for many families on means-tested benefits these rises will be offset by a reduction in benefits as their income rises.
The changes to NI are more beneficial to two-income families than one household income and will disproportionally benefit households with higher incomes.
The Chancellor could have directed his tax cuts on families with children with low household income.
Despite the Chancellor’s claim to “make sure that work always pays,” he missed a vital opportunity to reform or abolish the grossly unfair Child Benefit higher rate tax charge. At one point he claimed that a 32% marginal effective tax rate was too high but for families particularly single-earner families with 3 or more children or for single parents reaching 50k their marginal tax rate may well be as high as 80%. For every extra £1 they earn, they only bring home 20p as the rest goes back to the Treasury in tax!
How can this be anything other than a disincentive to work? It stifles growth. It destroys ambition, discourages aspiration and undermines fathers' or mothers’ (if main breadwinner) ability to support their family. Moreover, it pushes mothers back to work to plug the income gap separating mother from baby before they are ready.
“For every extra £1 they earn they only bring home 20p as the rest goes back to the Treasury in tax!”
MAHM remains highly concerned that mothers caring for their young children are seen and termed by the Treasury as ‘unemployed’. The work of forming and nurturing the next generation can not and should not be seen as ‘economically inactive’ or as a problem that needs to be solved by getting mothers into any other job that involves a paid transaction.
The economy will not thrive or grow if the next generation is neglected and those who care are not valued.
MAHM also remains concerned at the conditionality clauses imposed for those on Universal Credit particularly mothers with preschool children. Rishi spoke of the ‘inherent dignity of a good job’. MAHM believes in the ‘inherent dignity of mothering’. This is a good job. Only it is not counted.
22nd November 2023
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We need targeted tax cuts for families with children:
An end to the high marginal tax rates that punish work
Abolish the Child Benefit Higher Rate Tax charge
Remove the conditionality clauses forcing mothers of preschoolers to work 30 hours a week or lose their benefits