“Year of the squeezed middle”: Families face £4,700 hit from soaring taxes, mortgages and bills in 2024

Embargoed until 22.30 Thursday 4 January

The Liberal Democrats have warned that 2024 is set to be the “year of the squeezed middle,” as analysis by the party reveals families are facing a typical hit of over £4,700 from soaring taxes, mortgages and shopping bills this year.

The research shows a typical middle-income family will pay an extra £1,576 in taxes in the coming year due to the government’s freezing of income tax thresholds. The impact of the Chancellor’s cut to National Insurance will be massively outweighed by the government’s stealth taxes which are clobbering families and dragging people into higher rates of tax.

In addition, a typical family seeing their mortgage deal come to an end will see their annual repayments increase by £240 a month, or a staggering £2,880 a year. This is based on figures from the Bank of England, showing the impact of soaring mortgage rates after the Conservative Party’s disastrous mini budget.

Finally, a typical family’s food shopping bill is still £270 a year more expensive than this time twelve months ago, despite inflation gradually falling. This adds to a combined hit of £4,726, or £393 a month.

The Liberal Democrats are calling for a cost of living rescue package this year, including support for those hardest by mortgage hikes and extra help with energy bills.

Liberal Democrat Treasury Spokesperson, Sarah Olney MP, said:

“2024 is set to be the year of the squeezed middle, as families continue to be clobbered by unfair tax hikes, soaring mortgage payments and higher shopping bills. People are worried sick about paying the bills and having to make big cut backs just to get by.

“But instead of helping, Rishi Sunak is hitting families with yet more tax rises while the Conservative Party soap opera continues in Westminster.

“People are fed up with paying the price for this endless Conservative chaos. This is the year we can finally kick the Conservative Party out of government and offer the hope the country so desperately needs.”

ENDS

Notes to editor:

Stealth tax:

Due to frozen income tax and national insurance thresholds, a couple made up of one person earning £35,000 and one person earning £60,000 will pay an extra £1,576 in income tax and National Insurance next year (2024-25). This is despite the Chancellor’s cut to the rate of NI. Liberal Democrat analysis can be found here.

Mortgage:

On December 6th, the Bank of England published their latest Financial Stability Report, according to which the typical owner-occupier mortgagor rolling off a fixed rate between 2023 Q2 and the end of 2026 will see their monthly mortgage repayments increase by around £240, or £2,880 a year.

Weekly shop:

According to Liberal Democrat analysis, despite falling inflation, a typical family food shop is £270 a year more expensive than this time twelve months ago. 

Taken together, these three items add up to £4,726.

Cost of living support:

Liberal Democrats are calling on the Government to double the Warm Home Discount and extend its eligibility to everyone on Universal Credit, taking £300 a year off the heating bills of around 7.5 million vulnerable and low income households. This would be paid for by putting in place a proper windfall tax on the superprofits of oil and gas producers.

The Liberal Democrats are calling for an emergency ‘Mortgage Protection Fund’, paid for by reversing Conservative tax cuts for banks, to protect families falling into arrears or facing repossession as a result of soaring interest rates.

The fund would be targeted towards homeowners on the lowest incomes and those seeing the sharpest rises in mortgage rates. Those whose mortgage payments rise by more than 10% of their household income would be eligible for grants to help cover the cost of that rise, paid monthly. These payments would be capped at £300 a month.

The Conservatives have cut taxes for the big banks by more than £3 billion a year since 2016, through cuts to both the Bank Levy and Bank Surcharge. The Liberal Democrats would reverse these cuts so that big banks pay their fair share.

Similar emergency support to help homeowners at risk of losing their homes was introduced by the Government in 2009 in the wake of the financial crisis, including the Mortgage Rescue Scheme, Homeowners Mortgage Support scheme and changes to the existing Support for Mortgage Interest scheme.

The Liberal Democrats are also calling for protections for renters including an immediate ban of no fault evictions, a national register of landlords and the temporary reintroduction of pandemic-era measures protecting renters from evictions over rent-arrears and extending the mandatory notice period given by landlords.