5 Hidden Horrors in the Autumn Statement
EMBARGO: IMMEDIATE RELEASE
The Liberal Democrats have revealed five “hidden horrors” buried in the small print in the Autumn Statement, including a staggering £18bn of tax cuts for the banks while almost six million people are dragged into a higher rate of tax.
-
Bank tax cuts: Cuts to the bank levy and banking surcharge will mean a tax giveaway of a staggering £18 billion to banks over the next five years.
-
Police cuts: Home Office spending is set to be slashed by £100m in real-terms by 2024-25.
-
Crumbling schools: There will be a £1 billion (14%) real-terms cut in capital spending on education in 2024-25.
-
Stealth tax: Almost six million people are being dragged into a higher tax band by the freezing of tax thresholds (3.2 million into the lower rate and 2.6 million into the higher 40p rate).
-
Social Housing: New stealth tax on social housing providers will mean lower investment in existing and new social housing.
Responding to these announcements, Liberal Democrat Treasury Spokesperson, Sarah Olney MP said:
“Underneath the surface of this terrible “cost of chaos” Budget are yet more hidden horrors. Everything from police to social housing to our crumbling schools is being left in the dust by this Conservative Government.
“Everyone will be forced to pay for this cost of chaos budget with their public services being slashed more each year.
“Banks are being given a huge tax giveaway while millions are dragged into a higher rate of tax.
“The accumulated impact of these cuts will mean a bleak recession for years to come caused by an out of touch Conservative Government.”
ENDS.
Notes to Editors:
Bank tax cuts
Public sector receipts from bank taxes (£bn):
2016-17 | 2023-24 | 2024-25 | 2025-26 | 2026-27 | 2027-28 | 5yr total | |
Bank Levy | 3.0 | 1.3 | 1.2 | 1.2 | 1.2 | 1.2 | 6.1 |
Bank Surcharge | 1.7 | 1.2 | 0.9 | 0.9 | 0.9 | 1.0 | 4.9 |
TOTAL | 4.7 | 2.5 | 2.1 | 2.1 | 2.1 | 2.2 | 11.0 |
GDP deflator | 95.0 | 115.7 | 117.2 | 117.8 | 119.2 | 121.4 | |
Total if 2016-17 levels maintained in real terms | 5.7 | 5.8 | 5.8 | 5.9 | 6.0 | 29.0 | |
Difference | -3.2 | -3.7 | -3.7 | -3.8 | -3.8 | -18.0 | |
Real-terms cut since 2016-17 | 56.0% | 63.5% | 63.7% | 64.1% | 63.1% | 62.1% |
Sources:
2016-17 revenues from ONS, Public sector current receipts
All other data from OBR Economic and fiscal outlook – November 2022 (p.60, Table A.6)
Police cuts
2023-24 | 2024-25 | |
Home Office Resource DEL | £15.4bn | £15.5bn |
GDP Deflator | 115.7 | 117.2 |
Home Office DEL in 2023-24 prices | £15.4bn | £15.3bn |
Real-terms cut | £100m (7%) |
Sources: Autumn Statement Table 2.1 and OBR EFO Nov 22 – Economy Supplementary Table 1.7
Crumbling schools
2023-24 | 2024-25 | |
Education Capital DEL | £7.0bn | £6.1bn |
GDP Deflator | 115.7 | 117.2 |
Home Office DEL in 2023-24 prices | £7.0bn | £6.0bn |
Real-terms cut | £1.0bn (14%) |
Sources: Autumn Statement Table 2.2 and OBR EFO Nov 22 – Economy Supplementary Table 1.7
Stealth tax on income tax thresholds
The OBR Economic and Fiscal Outlook said that “Our estimates of the numbers of new (3.2 million) and higher-rate (2.6 million) taxpayers created by the now six-year freeze on the personal allowance and higher-rate income tax thresholds have risen since March, largely as a consequence of higher CPI inflation.” - OBR Economic and Fiscal Outlook, p.33
Social Housing Caps
Point 2.50 on page 28 in the Budget Document puts a cap on the amount rents could have risen meaning a maximum of 7% instead of 11.1% in 2023-24. As the Government is refusing to cover this shortfall, this is, in effect, a tax on Social Housing providers which will reduce investment by £630 million over five years in existing homes and building much needed new affordable homes.
