THE Budget announced by the Chancellor, Rishi Sunak, on Wednesday failed to address the “profound inequalities in the UK”, the director of Church Action for Tax Justice, Dr Justin Thacker, has said.
Mr Sunak delivered his Budget statement to the House of Commons at lunchtime on Wednesday. He announced measures that, he said, would protect “the lowest-paid and most vulnerable”, who had been hit particularly hard by the pandemic. The measures included a six-month extension to the Universal Credit uplift of £20 a week (News, 5 February), and equivalent support to claimants of working tax credits; and increasing the national Living Wage to £8.91 from April, “an annual pay rise of almost £350 for someone working full-time on the national Living Wage”.
Mr Sunak also announced that, in 2023, the rate of corporation tax paid on company profits would increase to 25 per cent. “Even after this change, the United Kingdom will still have the lowest corporation tax rate in the G7,” he said. He also pledged £100 million to establish a new HMRC taskforce to “tackle fraud in our Covid schemes”, as well as “new measures and new investment in HMRC to clamp down on tax avoidance and evasion”.
Dr Thacker said on Wednesday afternoon that the rise in corporation tax was “higher than expected, but welcome”. The benefit of the rise had been “completely undone”, however, by the announcement that, for the next two years, companies would be able to “super-deduct” 130 per cent of their investment expenses from their tax bill. “This policy seems ripe for abuse, and its effect may be that the tax gains from increasing corporation tax are entirely removed by the reductions that are now allowed,” Dr Thacker said.
The £100 million pledged to tackle tax avoidance “at face value . . . looks great”, he said. The small print showed, however, “that this taskforce will not be tackling the big businesses that are well known for not paying their taxes in the UK. Instead, it will be focused on those who have fraudulently exploited Covid support schemes.
“There is nothing wrong with that, but, when tax avoidance by big business is ignored, it seems unbalanced. Recently, it was reported that if you’re guilty of benefit fraud you are 23 times more likely to be prosecuted than if you’re guilty of tax fraud. I fear that something similar might be going on here, with a focus on small-scale tax avoiders, rather than the multinationals and wealthy individuals, who, as ever, seem to escape entirely.”
Dr Thacker concluded: “What is particularly disappointing about this Budget is that, apart from the relatively short-term Covid support, there was nothing in the Budget to support struggling families. There was nothing on council-tax reform, nothing on wealth taxes, nothing on personal taxes — all of which could have addressed the profound inequalities in the UK.”
The Bishop of Birmingham, the Rt Revd David Urquhart, who is Convenor of the Bishops in the House of Lords, said on Wednesday: “This is a time of great uncertainty, and while the Chancellor has rightly focussed on steps to get the economy moving, I’m concerned he has missed the chance to give certainty to those people and families who rely on Universal Credit, by not making the £20 uplift permanent. I’ll look at the details of the Budget closely for measures that will help the poorest and most vulnerable, especially access to sustainable jobs.
“The £19m for Domestic Abuse programmes is welcome as is support for schools to help get children back on the road of educational discovery. The lack of detail on social care is, however, a worry. The £300m additional funding for the Culture Recovery Fund is very welcome and will support the many small businesses and independent contractors our churches employ and support.
“I also note that the Levelling Up Fund prospectus specifically mentions cultural and heritage assets, including churches, and we look forward to churches and cathedrals particularly in areas of high deprivation taking part in this programme.”
The Bishop of Leeds, the Rt Revd Nick Baines, welcomed the announcement in the Budget of the creation of what Mr Sunak described as “the first-ever UK infrastructure bank”, to be located in Leeds. It would “invest across the UK in public and private projects, to finance the green industrial revolution”.
Bishop Baines said: “This is good news for Leeds, Yorkshire, and the future. Investment in green developments and enterprises is crucial, and is very welcome news.”
Mark Russell, Chief Executive of The Children’s Society, said: “We are bitterly disappointed that during his entire speech, Rishi Sunak did not mention children once.
“We know the Covid crisis has impacted businesses and employees and whilst we welcome measures, such as continuing the furlough scheme, much more must be done to help low-income families and future generations who have seen their incomes, future prospects, and well-being devastated by the pandemic.
“Nothing was said about investing more money in local welfare schemes or emergency crisis support, yet the existing funding will end this month. These schemes provide a safety net to those facing financial crisis and in the last year have provided a vital lifeline to thousands of families, helping them to keep the heating on, pay bills and feed their children. Nor was anything announced to support young people’s mental and emotional health. While academic catch-up is important, more must be done to improve young people's well-being, which we know has been in decline for a decade and has been further eroded by the Covid crisis.
“Throughout his speech the chancellor spoke about the country’s future, with a focus on business, but he failed to mention children — or announce any new support that will help them. Children are the employers and employees of tomorrow and they are suffering right now. The Government must recognise much more needs to be done for children and they should be seen as a priority. Only then can this Government truly build back better and give young people the hope for the future they deserve.”
Elizabeth Palmer, the chief executive of the anti-poverty charity the St Vincent de Paul Society, said that the six-month extension to the Universal Credit uplift was “not enough to support households as they struggle to get back on their feet. A permanent uplift should also be rolled out to people on legacy benefits.”
The chief executive of the Child Poverty Action Group, Alison Garnham, agreed: “Extending the £20 uplift is vital because struggling families cannot keep afloat without it, but that will be as true in six months as it is now. This decision only postpones the pain. The Chancellor promised certainty to business. Children and their families deserve no less.”
The National Churches Trust welcomed the announcement of an extra £300 million in England through the Culture Recovery Fund, and £77 million for similar initiatives in the devolved nations. “The fund has already helped many cathedrals and churches,” a spokesman said.
Responding to the Budget, the Leader of the Opposition, Sir Keir Starmer, said: “After the decisions of the last year and the decade of neglect, we needed a Budget to fix the foundations of our economy, to reward our key workers, to protect the NHS, and to build a more secure and prosperous economy for the future. Instead, what we got was a Budget that papered over the cracks rather than rebuilding the foundations.”
Listen to an interview with Dr Justin Thacker on the Church Times Podcast