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Budget given cautious welcome by UK debt charities

06 March 2024

But the Chancellor is also criticised for ‘poverty of ideas’

Alamy

The Chancellor, Jeremy Hunt, leaves 11 Downing Street before delivering his Budget in the House of Commons, on Wednesday

The Chancellor, Jeremy Hunt, leaves 11 Downing Street before delivering his Budget in the House of Commons, on Wednesday

ASPECTS of the Chancellor’s Spring Budget received a cautious welcome from UK debt charities on Wednesday — but Christian Aid said that it demonstrated a “poverty of ideas” amid the current crises.

On Wednesday afternoon, the Chancellor, Jeremy Hunt, announced a 2p cut to National Insurance, which comes on top of a similar cut in the Autumn Statement (News, 18 November). “The money you earn doesn’t belong to the Government, it belongs to you,” Mr Hunt said, in a heavily trailed statement in the House of Commons.

Before the speech began, the Labour MP for Streatham, Bell Ribeiro-Addy, wrote on social media of the implications of tax cuts. “For every £1 the government spends on NIC cuts, 46p will go to the richest households. Just 3p will go to the poorest. And every penny is money taken away from school, hospital, and council budgets, where it is so badly needed,” she suggested.

“What the Tories have briefed ahead of today is a cut and run budget. Instead of prioritising long-term investments to fix our crumbling NHS, schools, and homes, they want to take money out of future budgets for a pre-election giveaway to their base.”

Christian Aid’s chief of UK advocacy, Sophie Powell, said that the Budget “demonstrates a poverty of ideas”, which would “tie the government’s own hands rather than mobilise the resources needed to address the spiralling, and inter-connected, crises of inequality and climate change.

“He should have taxed the wealthiest and the biggest polluters to fund the UK’s fair share of international climate finance. He should have agreed to cancel debts for the poorest countries. That is the ambition we so urgently need, not the same old pretence of there being no other way.”

A move to abolish fees for debt-relief orders (DROs) was welcomed by the charity Debt Justice, which described it as a “first step”.

“Now we need to see other barriers to accessing debt relief removed so that the millions of people weighed down by unmanageable debt have a clear route to becoming debt free,” the executive director, Heidi Chow, said.

The director of external affairs at Christians Against Poverty, Gareth McNab, also hailed the move. “We have campaigned for reform of DROs for a number of years, highlighting the key barriers that have prevented thousands of households from breaking free from the chains of problem debt,” he said.

Rules on non-domiciled tax status would be “abolished” to ensure that the system was “fairer and remains competitive”, Mr Hunt said. A new residency system would take effect only after people had lived in the UK for four years.

Capital-gains tax on residential property would be reduced from 28 to 24 per cent, Mr Hunt said. He argued that this would help to stimulate more transactions, and thereby increase tax revenue overall.

The thresholds on child benefit would be shifted upwards, and Mr Hunt said that he would consult on further changes to consider the payments based on household rather than individual income.

The Children’s Society’s chief executive, Mark Russell, welcomed changes to child-benefit thresholds, but said that this did “little for families on lower incomes who have seen social security for children fall in real terms over the last decade. Millions of children live in poverty which is an outrage and a scandal, and I heard nothing today that will change the lives of the families living hand to mouth.”

Nor did the “minor boost to social-care funding . . . go anywhere near what is needed to reset the system”, he said. The Budget was a “missed opportunity” to support struggling families and children, and, while the six-month extension of the Household Support Fund would be “a vital lifeline for families”, the limit “risks a cliff edge in crisis support at a time when there may be an election”.

The lack of support for church buildings was “disappointing”, the National Churches Trust’s chief executive, Claire Walker, said. “The closure of many church buildings is the single biggest heritage challenge right now, with many churches, chapels and meeting houses at risk of falling into disrepair and being forced to close. . .

“Without regular financial support from the UK Government, and more funding from heritage organisations, denominations and philanthropic trusts, more and more churches will close if they cannot pay for repairs. This will mean an uncertain future for precious buildings, symbols of hope and continuity, and the loss of the community support they provide.”

Mr Hunt confirmed that a raft of tax cuts and freezes that were already in place would continue, including those on fuel and alcohol duty. A windfall tax on energy companies would remain until March 2029, a year longer than originally expected.

The Household Support Fund, which enables local councils to support foodbanks and other measures, would continue until the end of September. Charities, including Barnardo’s and Church Action on Poverty, had called on the Government to maintain this funding stream.

Mr Hunt also announced a £3.4-billion investment in IT systems for the NHS, in an effort to improve productivity — a move that the Institute for Public Policy Research (IPPR), a Left-leaning think tank, said was “no match for the scale of the challenge we face”.

“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,” said Chris Thomas, who is head of IPPR’s commission on heath and prosperity.

In his speech, Mr Hunt asserted repeatedly that Labour would increase taxes.

In his response, the Labour leader, Sir Keir Starmer, said that the Government was “completely unable to generate the growth that working people need”.

The Office for Budget Responsibility (OBR) growth forecast announced in November remains more or less unchanged, and the short-term outlook remains one of a slight recession.

“As the desperation grows, they torch not only their reputation for fiscal responsibility, but any notion that they serve the country, not themselves,” Sir Keir said. The overall tax burden was at a 70-year high. “There will be no change of direction until a change of government.”

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