Paul Johnson
@PJTheEconomist
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Director IFS. Father of four.
London, England
Joined March 2015
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Last Seen Profiles
Oh for goodness sake.
What is the possible justification for cutting income tax rate while raising NI rate?
Drives further wedge between taxation of unearned income and earned income. Yet again benefits pensioners and those living off rents at expense of workers
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Not much of a boast really to say that school spending per pupil will return to 2010 levels. A decade and a half without growth is quite a thing
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Worth repeating. Take all the tax changes coming in over next few years and:
If your income is < £155k, you lose
If your income is > £155k you win
If your income > £1m you gain more than £40,000
Despite today's tax cuts middle earners are still set to lose as a result of tax changes over next years. The freezing of allowances and thresholds is still a big tax increase.
Only those on over £155,000 will pay less tax overall. The very rich will pay tens of thousands less
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Simply staggering numbers in OBR report. Real Household Disposable Income per person to fall more than 7% over next two years. Biggest fall on record. Taking incomes down to 2013 levels.
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£45 billion of tax cuts. This is biggest tax cutting event since 1972. Barber's "dash for growth" then ended in disaster. That Budget is now known as the worst of modern times. Genuinely, I hope this one works very much better.
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Recall that the government has spent months saying it can't find any money to prevent nurses and teachers getting very big pay cuts. He just found £6 billion to cut fuel duties. That's a choice.
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The government has an official position on fiscal effects of Brexit. This is it.
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From a fiscal point of view important to remember cut to 45p rate was just about smallest part of the "mini budget". What was a £45bn tax cutting package is now a £43bn package.
This U turn has, in itself, essentially no effect on fiscal sustainability.
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Staggering statistics. Real average weekly earnings are same today as in November 2005.
A completely unprecedented period with no earnings growth. Hard to compare but likely this has not happened over any comparable period since Napoleonic wars.
Long view on today's labour market stats is price-adjusted average pay is down £35/wk since Feb 2008
A drop from £532 to £497 over 182 months' of data
Few would have guessed possible (without a revolution!) -- except those who knew the US horror story
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Extra spending can't be funded by Brexit dividend.
1) Govt has accepted Brexit will *weaken* public finances by £15bn pa
2) Financial settlement with EU plus commitments to replace EU funding already uses up all of our EU contributions in 2022
There is no Brexit dividend
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All that extra money announced by govt last week not quite what it seems.
The "Rooseveltian" additional £5.5bn of capital spending represents an increase of precisely zero this year on Budget plans. Is a reallocation from one set of projects to another
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Buckingham Palace, valued at around £1bn, sits in band H and is charged £1,828 by Westminster City Council, less than an average three-bedroom semi in Blackpool...46% of households in England will receive a bigger council-tax bill than the Palace.
@Occasional70366
@PJTheEconomist
Look at the council tax for Buckingham Palace and the council tax for a 3 bed semi in Blackpool
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Sure Start worked. It had big long term effects on the educational achievement of poor children. Its demise is a study in policy failure - over centralisation, over extension, poor data, "not invented here syndrome".
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Statement and chart are literally true. But do they reveal the truth? No.
Economy grew strongly because it collapsed so much in 2020. Only interesting comparisons are with pre-covid levels. We've done less well than most of G7 since then.
New GDP figures released this morning show the UK economy has reported the strongest growth since the Second World War.
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This is actually awful. Yet more years of real incomes barely growing. High inflation, rising taxes, poor growth keeping living standards virtually stagnant for another half a decade
Over the next 5 years real household disposable income is expected to grow by 0.8% per year, well below the historical average.
But growth had been weak in the decade before COVID, meaning average incomes are now expected to be 28% (£9,000 per capita) below the pre-2008 trend.
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The idea that immigrants take jobs from natives is just a fallacy
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One OBR chart not mentioned by Chancellor. Trade with EU sharply down, and consistent they say with their projection that reduced trade post Brexit would reduce productivity (hence living standards etc) by 4%. Which is bigger than expected long run effect of pandemic
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Remarkable quote from OBR document. Biggest fall in living standards since records began in 1950s
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No extra money for health, schools or other public services despite huge increase in inflation. Likely implies big real pay cuts for most public sector workers. E.g. govt evidence to teacher review body asked for just 3% pay rise for most teachers as inflation averages over 7%
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Every time I see this chart I am amazed. ONE in SIX 55-64 year olds owns a second property.
It's the flipside of low ownership rates among the young - they are renting from their parents' generation. The allocation of housing, not just the quantity, matters.
Multiple property ownership is becoming more common among older people than in the past, and these properties tend to be held onto throughout retirement (5/6)
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A pretty good reading of my feelings when I spoke to
@Steven_Swinford
about this.
.
@PJTheEconomist
does not often get angry. But you can feel the steam coming out of his ears in his quote to
@Steven_Swinford
about
@RishiSunak
’s plan to cut the basic rate of income tax
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Those in born in 1980s have only half the wealth by age 31 of those born in 1970s. Remarkable reversal.
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The big omission from this statement was anything for those subsisting on means tested benefits. They will be facing cost of living increases of probably 10% but their benefits will rise by just 3.1%.
And cut compared to last year if you account for withdrawal of £20 UC uplift
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Inflation overall is 9%. But our analysis suggests that the poorest are facing an inflation rate or around 11%. That’s because they spend a large fraction of their budget on energy and food. Their benefits of course rose by just 3.1%.
NEW: Average inflation reached 9% in the year to April, but the poorest households faced inflation rates of 10.9%.
This is 3 percentage points higher than inflation rates for the richest decile.
[THREAD: 1/4]
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Still have to pinch myself when I see this. Biggest cuts in funding per pupil have been in deprived schools outside London, precisely those which are already struggling the most.
📊
#IFSSatStat
: The new National Funding Formula has boosted funding for the most deprived fifth of schools the least (by less than 1%) since 2017.
This follows bigger cuts for schools in deprived areas during the 2010s, esp. outside London, where educational outcomes are worst.
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Where is the detail? This was a huge fiscal announcement with almost none of the detail mentioned to parliament and as far as I can see still no document published.
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Economic "orthodoxy" is not some strange belief system. It's an encapsulation of the knowledge drawn from decades of evidence based on experience of countries around the world. It needs testing and challenging, but experience tells us that simply dismissing it is dangerous indeed
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Abandoning IR35 changes. Hurrah. A tax evaders charter costed at £2 billion is not going to happen
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Disappointing to hear the chancellor again conclude by claiming to be cutting taxes. He emphatically is not. He is raising them, and to historically high levels.
I think that is the right thing to do. But his tax plan is to raise taxes not, as he keeps saying, to cut them.
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Your regular reminder that, whatever its merits as a policy, abolishing tuition fees is of no help to the half of young people who don't attend university, is of no help to low earning graduates, and is a big giveaway to the highest earnings graduates.
The highest-earning graduates would benefit most from Labour’s policy of scrapping fees and bringing back maintenance grants. Loan repayments for the top third would fall by around £50k.
Actual loan repayments for low-earning graduates would be almost completely unaffected.
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NB - chancellor just announced a long term cash freeze in investment spending. That's a significant real cut of course.
We already have public sector investment well below that in most comparable countries. That is not good for growth.
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You cannot understand poverty or inequality in the UK without understanding housing costs and what has been happening to them.
They are a much bigger fraction of the budgets of the poor than the better off and have been rising far faster for the poor.
In 1968 housing costs made up 9% of average incomes for the poorest households and 4% for the richest.
By 2021 this has gone up to 21% and 6% respectively.
That is, housing costs now make up 3.5x as much of the budgets of the poor as of the rich.
🧵on our new
@TheIFS
report👇
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Despite today's tax cuts middle earners are still set to lose as a result of tax changes over next years. The freezing of allowances and thresholds is still a big tax increase.
Only those on over £155,000 will pay less tax overall. The very rich will pay tens of thousands less
Today’s measures mean that the richest tenth of households, who were set to lose around £3,500 a year (3%) on average by 2025-26 under Johnson and Sunak’s plans, will now gain around £700 a year (1%) on average.
#minibudget
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Tax and spending promises by leadership candidates:
- Raab: £30bn+ tax cut;
- Hunt: £20bn+ more spending on defence;
- Johnson: £10bn tax cut;
- Gove: abolish VAT;
Me in
@thetimes
on lack of seriousness. What are their actual fiscal strategies?
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New piece on the NHS Brexit dividend. It does not exist. In fact we would need to spend £1bn a year more just to compensate NHS staff for the higher prices already seen since the referendum.
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Again claiming increase in minimum wage is worth £1000 to a full time worker. Worth about £700 after tax and NI, and less than £300 to anyone on Universal Credit
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Economy - and hence our living standards - is 2.5-3% (£55-£66bn) smaller than it would have been without Brexit vote. We have lost out on 3 years of global economic growth.
Citi analysis in
@TheIFS
Green Budget published today
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This is what policy failure looks like.
I just re-discovered this chart, showing how the number of home insulation projects delivered through government schemes fell off a cliff after 2013. From 1.3m loft insulations per year, to fewer than 100,000.
With hindsight that feels... sub-optimal
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“UK is only G7 economy not to have re-attained its pre-pandemic level by Q2 2022”
.
@Citibank
's Chief UK Economist Benjamin Nabarro presents on the economic outlook for the UK in our
#IFSGreenBudget
launch.
Watch live here>
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Obviously not true in any seriouse sense. £1,000 gross not net. Anyone on UC will lose much more than half of that. Lots of people on UC are not on NLW. Etc etc
Treasury confirms that national living wage will rise to £9.50/hr and says this will be £1,000 annual boost for a full-time worker - almost exactly replacing the impact of the universal credit uplift ending...
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The 6 year freeze to income tax and NI thresholds really is a staggeringly big tax increase. It’s a key part of why taxes are rising to highest level ever.
That such tax rises are needed reflects v high interest payments, poor growth and increasing spending pressures.
The six year freeze to income tax and national insurance thresholds is now set to raise a colossal £52 billion in 2027/28.
To give a sense of scale, that's equivalent to 6p on the basic and higher rate of income tax, or increasing the main rate of VAT from 20% to 26%.
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Bluntly, if we want to reduce immigration we need to pay more for social care. If we don't want to pay more for social care we will continue to rely on immigrants.
Both the Conservative and Labour parties have indicated a desire to bring down net migration.
But substantially cutting migration could reduce the size of the workforce in key sectors. Workers from non-EU countries were 16% of the adult social care workforce in 2022–23.
[12/14]
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Health is taking a bigger and bigger share of public service spending up from 23% in 2000 to 29% in 2010 and planned to hit 38% by 2023. At some point this is going to require higher taxes. We can’t just keep squeezing everything else.
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OBR:
"The rise in inflation to a 40-year high this year is expected to reduce real household disposable incomes (RHDI) on a per-person basis by 2.2 per cent in 2022-23 the biggest fall in living standards in any single financial year since ONS records began in 1956-57"
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Pay for highest paid/most skilled public sector workers (doctors, experienced teachers etc) has been cut drastically. Public sector diverging ever further from private sector. Papering over the cracks by bringing in more from abroad. Not sustainable.
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That, in a sentence, is what happened yesterday.
@PJTheEconomist
“How did Mr Hunt afford tax cuts when real economic forecasts got no better? He banked additional revenue from higher inflation, and pencilled in harsher cuts to public spending.”
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This is just astonishing. A doubling and more of the numbers in every age group moving on to Personal Indepence Payment (PIP - our main disability benefit) over just one year. This is NOT a catch up from people not claiming during Covid, it is a huge increase in claims.
Here we zoom in on the increase in that yellow line. This is the number of new claims by single year of age in July 21 & 22. Huge increase at every age, and in mental and physical health. Mental/physical split little changed - and this is true more generally across conditions...
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Not that much to be Tiggerish about here. Growth forecasts dreadful compared with what we thought in March 2016, dreadful by historical standards and dreadful compared with most of the rest of the world.
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On a per person basis it’s considerably worse than the headline figures. This was a period of rapid population growth. On a per person basis GDP has been falling consistently for two years.
Not sure calling this a “mild” or “technical” recession quite gets at the scale.
Economy in Q4 2023 confirmed at £566.6 billion… (ABMI official measure)
smaller than it was in Q1 2021 (£567bn. no net growth over two years, down 0.1%), and
Smaller than in Q4 2022, when the PM and Chancellor arrived in Downing Street (£568bn … down 0.3%)…
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Just listened to the PM's statement. Can't quite believe nothing there about the cost. This is one of the biggest announcements in peacetime history, and apparently we'll be told how much in a few weeks.
Not a complaint about the policy. But some transparency would be welcome
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Not surprising, but so depressing.
Govt know perfectly well that council tax is out of date, regressive, inequitable, inefficient, gums up the housing market, and is anti "levelling up".
Total lack of courage to do anything about it. Also, note Opposition silence on this.
🏠New: Government will not reform council tax
Response to Levelling Up Committee is pretty clear on changing unfair bands:
⛔️ Too expensive to do
⛔️ Likely to hit pensioners
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Try as hard as we can, given plausible forecasts, we can’t see how to get public finances on a sustainable path without big, painful spending cuts or a reversal of £43bn tax cuts just announced. Chancellor has a big job to reassure markets his mini budget spooked so badly
NEW: Getting government debt falling in the medium term with a weaker economy and without cancelling tax cuts could force
@KwasiKwarteng
into big and painful spending cuts.
Read our
#IFSGreenBudget
findings, with
@Citibank
and funded by
@NuffieldFound
>
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I still struggle to get my head round these statistics. One in seven of those around the age of 70 don’t just own their own home, but own a second home as well.
85% of the
#PlatinumJubilee
generation are homeowners, meaning that most have benefitted from the house price boom that occurred during their working lives.
1 in 7 of them own a second home.
[5/8]
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OBR pointing out UK has moved "from near the top of the G7 growth league table to near the bottom"
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Sad thing is to a large extent this is the path we chose, not an inevitability. Brexit, yes. Also cutting capital spending in 2010s, cutting education, failing to reform planning or tax, failure of housing policy, topped off by years of damaging political dysfunction.
Just to put things into perspective. If the UK economy had grown at the same rate after 2007 as it had in previous decades,
every person in Britain would be £10,600 a year better off on average
Economic growth matters
ENDS
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This is not a complaint about policy. It is sensible to reallocate money especially at present time. It is a complaint about lack of clarity and transparency. It should not take us
@theifs
a week to work out what is going on. In part mea culpa, but really more transparency please
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This is the first Budget I can remember in which there have been NO major announcements that weren't pre-briefed. Tell me if I'm wrong but I think we knew every major change before Mr Hunt stood up
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Private school fees have risen 20% in real terms since 2010 and 55% since 2003. Numbers privately educated have been pretty constant that whole time. Removing tax exemptions likely to have only small effects on numbers. Net benefit to public finances likely to be £1.3-1.5bn p.a.
NEW: How much revenue would be raised from removing tax exemptions from UK private schools?
Our new report by
@lukesibieta
, funded by
@NuffieldFound
, calculates the net gain to the public finances from
@UKLabour
’s proposed policy:
[THREAD: 1/11]
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Ben Nabarro “Total Uk trade 25 to 30% below its pre Brexit trend”. Especially big loss of high value professional service exports to EU.
This is a big drag on the economy.
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This is what has happened to yields on 10 year UK gilts today. This scale of movement so fast is highly unusual. Looks like markets are a little spooked by scale of fiscal giveaway
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Public spending per head in Scotland is c.30% higher than in England. Almost entirely paid for by transfers of revenue from England. SNP, and other Scottish parties, promised further big increases in spending, but said nothing about where the money would come from.
📰 “Where were all the parties intending to get the money from to pay for all these goodies?”
@PJTheEconomist
in
@thetimes
this morning on the absence of costed promises in the Scottish elections.
Read here (£) >
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Rather than scrapping IHT we urgently need to reform it.
It is genuinely unfair.
The very wealthy pay an average rate half, or less, that paid by the moderately wealthy. If all you leave is the family house it's hard to avoid. If you have millions it is absurdly easy to avoid
Yes the big problem this country has is that the wealthiest 4% of families don't have enough money. Slow handclap.
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Extra NHS funding at 3.4% p.a. means rises over next 5 years higher than over last 8, but still below long run average.
Extra £20bn means higher borrowing or higher taxes. Former incompatible with manifesto commitment.
Means health spending accelerating as % of total spending
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Inheritance tax should be the most progressive of taxes. But the wealthy have become so adept at avoiding it that it now imposes a higher burden on middle class estates than on the very wealthy. It's time to act. Me in
@thetimes
(chart from OTS)
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This from OFQUAL report is pretty striking. Big boost for private schools in A level grades awarded. FE and 6th form colleges seem to have lost out. Presumably because more weight given to teacher predictions in small 6th forms. Not obviously fair.
Looks like sixth form and FE colleges have particularly lost out in the standardization process for this year's A Level results. Private schools reaping the benefits with a huge increase in grade A and above.
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Everyone would like lower taxes. But need to be clear about consequences. Short run and long run issues.
In short run OBR did say £30bn headroom against fiscal target. But that assumes spending rises only at rate set out in September when inflation expected to hit just 4%
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Quite a chart. Scottish govt has implemented over £500m of income tax increases (equivalent to >£5bn in UK terms)
These have netted *nothing* in additional revenues relative to no devolution. Scottish incomes have risen more slowly, and income tax base has shrunk, relative to UK
🚨 Three important (but so far little commented upon) nuggets from today's updated
@scotfisccomm
forecasts published alongside
#scottishbudget
.
1⃣ The continuing poor underlying performance of Scottish Income Tax revenues, driven by weaker employment and pay growth... [1/6]
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All our analysis of todays not-so-mini budget is here
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If Bank of England is right and inflation hits 13% in October then poorer households will experience inflation of c.18%. That's because they spend such a large fraction of their budgets on energy and food, prices of which are rising so fast.
18%...
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It became apparent to us, bizarrely, through the Barnett formula! Allocation to Scottish government following last week's statement was just £21m. That was because total spending envelope so little changed by last week's announcement
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Big, expensive package from Rishi Sunak. In conjunction with tax rises already in place this is hugely redistributive - taking from high earners and giving to the poor
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Creating an entirely new tax to fund health and social care. A massive and unncessary increase in complexity. Achieivng nothing that could not have been done within exitsitng income tax and NI systems
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It wasn't actually a tax cutting Spring Statement. Rishi Sunak banked more in rising tax receipts, as inflation creates a lot of fiscal drag, than he gave away in tax cuts. Me in
@thetimes
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Expect the tax rises just announced to raise about £12 billion a year, about 0.5% of GDP.
Remember that's on top of £25 bn of tax rises announced in the Budget.
This is a huge year for tax rises: a permanent increase of 1.5% of national income to highest in peacetime
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In 1990 1 in 15 taxpayers paid higher rate of income tax. By 2025 it will be 1 in 6. This is a very big change in the structure of income tax. The basic rate may have fallen but a lot of people are paying higher rates of income tax
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This is just an astonishingly depressing statistic. Put that alongside huge growth of house prices and negative real returns on savings and you can see the struggle of younger generations in a nutshell.
Workers born in the 1980s with median earnings now don’t earn any more than those born in the 1960s did at their age.
We still don’t have the policy tools to boost the earnings of any other than the low-paid.
[7/8]
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This will cost billions. Economic and fiscal constraints are real. It’s not just “Treasury orthodoxy” or a failure of imagination. The magic money tree really does not exist.
UK 10-YEAR GOVERNMENT BOND YIELDS ON TRACK FOR BIGGEST CALENDAR MONTH RISE SINCE AT LEAST 1957 - REUTERS ANALYSIS OF BANK OF ENGLAND AND REFINITIV DATA
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Lots in Labour's manifesto today. One striking thing is the plan to take corporate taxes in the UK to the highest in the G7 and almost the highest in the whole OECD. This clearly comes with risks.
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An awful lot.. I still can't quite process this as a sum you could spend on PPE. Not far off entire social care budget for a year.
I suspect the National Audit Office will have a close look at this..£15bn sounds like an awful lot of money
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It is a sad truth that current budget balance in Mr Sunak plans will require the highest sustained tax burden in UK history and yet more cuts to spending on "unprotected" departments. A problem created by a decade of paltry growth followed by the deepest recession in history
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A reminder that abandoning the cut to the 45p rate may be important politically. It may matter for the tone of government. It affects inequality. But it is of trivial importance fiscally.
95% of the tax cuts remain in place, and the problems of fiscal sustainability remain.
Kwarteng's "£45bn package of tax cuts has now become a £43bn package - a rounding error in the context of the public finances."
"He still has a lot of work to do if he is to display a credible commitment to fiscal sustainability."
Our full statement>
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Inheritances are growing, but very unevenly shared. Inheritance tax revenues while small are also growing. But IHT is easily avoided by the wealthy. The case for reform, closing obvious loopholes, is overwhelming. The case for simply cutting it is not.
Cutting inheritance tax isn’t quite as simple as its proponents suggest.
@PJTheEconomist
in the
@thetimes
this morning on the realities of reforming inheritance tax ⬇️
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Note what the Chancellor did not mention. Nothing on public sector pay. No mitigation of big income tax rises coming in this April. No more money for public services post 2024.
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I’m pretty grumpy. Lots to learn about responding to covid & future pandemics. A serious analysis of trade offs implicit in lockdowns, social costs etc is needed. But spending 4 years and £100m+ on who said what to whom in a series of legalistic confrontations is ludicrous.
Just when you were starting to despair, it’s out. The latest episode sees
@DrHannahWhite
@PJTheEconomist
and me discuss what we’ve learned from the COVID Inquiry
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Strong positive effects of SureStart on GCSE results for poorer children. More strong evidence that well designed early intervention can be very effective.
Also shows importance of high quality evaluation. Great work by my colleagues.
Policymakers take note.
NEW: Sure Start, England’s first large programme to provide holistic support to families with children under five, greatly improved disadvantaged children’s GCSE results.
Read
@nridpathecon
@Sarah_Cattan
@carneiro_econ
’s report, funded by
@NuffieldFound
:
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Thanks Paul. Here are some of the other stats:
one third of working age adults live in households entitled to Universal Credit
43% of adults don't pay income tax
129% - that's how much more generous basic benefits for pensioners are than for non-pensioners. Gap was 30% in 1990
Excellent Christmas statistics from
@PJTheEconomist
not least 58% of households in poverty contain someone who is in work well worth a read.
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Poorest third of children won't benefit from £5bn expansion in childcare provision
Over past 8 years share of poorer children eligible for free childcare fell by 30%
We've moved away from helping development of poorest kids to supporting better off families with childcare costs
The March 2023 Budget announced a major expansion of the free childcare programme, offering new provision for children aged nine months to two years in working families.
This is the largest and fastest expansion on record, doubling spending in just three years.
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Another freeze in fuel duty. Once again rhetoric on environment and climate change not matched by reality of continually reducing tax on burning petrol and diesel
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But...taxes on income and earnings are still much higher than three years ago. This undoes only a small fraction of the huge tax increase resulting from the freezing of income tax allowances and thresholds.
12% rate of employee NI rate down to 10%. I think this may be first cut in main employee NI rate in history (other than last year's reversal of last year's increase).
If you are going to cut income tax or NI then yes, NI is the right one to cut.
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If we go down the no deal route spending may rise initially. But the economy will be hit and spending will need to be reined in later on. That could mean another period of austerity. Without Brexit we would already have left austerity behind us.
We really should be consigning austerity to history, but we are in danger of talking our way into another dose of it.
Sobering words from
@PJTheEconomist
for
@MoS_Politics
.
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That’s a massive overestimate of GDP equivalent. £1.7 bn is less than 0.1% of GDP.
The government's own assessment is that joining CPTPP would actually provide a *£1.7 billion* boost to UK exports - the equivalent of 0.8% UK GDP...
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The £2bn green homes grant is also funded by underspends from elsewhere (don't know where). Also true of half the £400m for traineeships etc
This may all be (probably is) perfectly sensible reallocation but the lack of transparency is remarkable
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Cutting 45% rate *next* year expected, by HMT, to cost £2.4bn *this* year. Some very rich people will change timing of income, esp dividends and bonuses. Happened in reverse in 2010 when 50% rate introduced. Giving 6 months notice is expensive - and was unnecessary
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Possibly most important chart in today's documents. Interest spending going through the roof. Responsible for most of the deterioration in public finances. High interest rates, high borrowing, high inflation, and huge amounts of debt held by Bank of England, cost us very dear
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This from
@OBR_UK
is spot on. Spending plans from 2022 include precisely nothing for dealing with additional pressures arising from the pandemic, of which there are plenty. In fact they involve spending cuts relative to pre-pandemic plans. Is that really credible?
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That is an extraordinary cut in the salaries of teachers over such a long period. Much worse than for workforce as a whole. Government can’t keep doing this. Consequences for teacher recruitment and retention, not to mention living standards, will become too much.
NEW: Pay freeze will mean 8% drop in salaries of experienced teachers since 2007 and 4-5% for less experienced teachers.
Read our full briefing written by
@lukesibieta
and Jonathan Cribb, funded by
@NuffieldFound
>
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Scots earning between £100k and £125k will now face a marginal tax rate of 69.5%.
So, the Scots now have starter, basic, intermediate, higher, advanced and additional rates of income tax.
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The under 50s would pay two thrids of cost of social care if paid for through NI, with pensioner families paying almost nothing.
An income tax rise still leaves pensioners paying just 14% of the cost, but is clearly far more equitable across generations.
NEW: Families with pensioners would provide only 1.4% of the revenue from a NICs rise, compared to 14% if income tax rates were to increase instead.
@StuartAdam_IFS
compares the effects of increasing NICs and income tax rates to fund social care reform>
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Taken aback by ChX statement.
Basically return to March schemes (dreamt up on the hoof in 24 hrs) as if nothing learnt since.
Wasteful & badly targeted for self-employed. No effort at targeting sectors/viable jobs for employees. Big contrast to position just days ago.
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What Mr Sunak has not mentioned is that public spending will not be increasing as much in real terms as announced in October as inflation takes its toll
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