Hammond: tax reform will aid poor  

25 November 2016

CREATIVE COMMONS

Pile: Wentworth House in South Yorkshire has been granted £7.6 million from the Government, for repairs. The Chancellor claimed that it had been subject to "cultural vandalism" by Labour in 1946, when coal mining was permitted "virtually up to the front door"

Pile: Wentworth House in South Yorkshire has been granted £7.6 million from the Government, for repairs. The Chancellor claimed that it had been subje...

THE Bishop of Birmingham, the Rt Revd David Urquhart, has commended the Government for its desire to help those who are "just managing", and its emphasis "on work as being an important route out of poverty". But those on the lowest incomes will still struggle, he warned.

Rises in the personal income-tax threshold and the National Living Wage, and a reduction in the Universal Credit taper, are designed “to help families make ends meet and to ensure every household has opportunities to prosper”, the Chancellor, Philip Hammond, told MPs in his Autumn Statement, delivered on Wednesday afternoon.

The income-tax threshold — the amount an employee can earn before paying income tax — will increase to £11,500 in April, and rise to £12,500 by the end of the Parliament. Also in April, the National Living Wage will rise from £7.20 to £7.50 per hour.

But the Shadow Chancellor, John McDonnell, dismissed the moves, saying that the increase in the National Living Wage was below that envisaged under the previous Chancellor. A fairer tax system would be achieved, he said, if the higher rate of tax was increased to 50 per cent.

The Chancellor rebutted the criticism, telling MPs that the increase in the National Living Wage was the rate that had been recommended by the Low Pay Commission. Mr Hammond began his speech by saying that the International Monetary Fund had predicted that Britain would have “the fastest growing major advanced economy in the world this year”. Employment was at a record high, and unemployment was at an 11-year low. The country had “bounced back from the depths of recession” through the “hard work of the British people”, he said.

Corporation tax, which had been reduced from 28 per cent to 20 per cent since 2010, would fall further to 17 per cent. “Britain is open for business,” he said, “. . . and the raft of investments in the UK announced since the referendum — by Soft bank, Glaxo, Nissan, Google, and Apple, amongst others — con firms it.”

Bishop Urquhart, who leads for the Bishops on economic and financial policy matters, said that he welcomed the Chancellor's "emphasis on long term stability, investment in innovation, in our national infrastructure and on supporting regional growth. To be a nation living within its means is an aspiration worth keeping, even if the revised figures for deficit reduction mean that the goal of its achievement has been moved slightly further away."

He welcomed the increases in the National Living Wage and "partial reversal" of planned cuts to Universal Credit, but warned that, given the rising cost of living, those on the lowest incomes "might benefit from more targeted assistance than further increases in the tax free personal allowance, which mostly benefits better off families".

The commitment to 40,000 new affordable homes was welcome, but there must be a "greater focus" on social rented homes, the Bishop said. He congratulated the Government to its continued fulfilment of the target to spend 0.7 per cent of GDP on overseas aid.

During his speech, Mr Hammond announced that the Government would provide a grant of £7.6 million towards urgent repairs at Wentworth Woodhouse, a Grade I listed house in South Yorkshire. 

Bishop Urquhart noted a warning from the Joseph Rowntree Foundation about the four-year freeze on working-age benefits, which was "looking increasingly out of date". He suggested a "rethink" on this, and on the two-child limit on new claimants for tax credits and Universal Credit. He drew attention, too, to the proposal from the Children's Society for a "breathing space" for families with problem debt (News, 23 September).

The Children's Society described the statement as "half-baked". It did not contain any "major new cuts" for low-income families, but measures such as the increase in the minimum wage were "measly morsels next to the nearly £11bn of ongoing cuts announced last year which will cut support for struggling families in 2020".

The full 2018 Budget statement will be delivered in autumn 2017, and all future Budget statements would move from the spring to the autumn, he said, to “allow for greater Parliamentary scrutiny of Budget measures ahead of their implementation”.

 

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