Theo Underwood has delivered a blistering assessment of Labour’s first Budget, arguing it sets the tone for a Parliament defined by higher taxes and deeper uncertainty.
He says the Budget represents “a clear and unavoidable breach” of Labour’s 2024 manifesto pledge not to raise taxes on working people.
The Chancellor extended a freeze on tax thresholds for an extra three years in a move that will force millions to pay more tax.
Mr Underwood said: “I did notice yesterday, with all the comments coming in from people like the Prime Minister when he was out and about not trying to deny that it’s a manifesto breach, simply saying, well, working people are just going to have to pay that little bit more.
“And the Chancellor made the argument that she’s trying to keep the increases in tax down.
“But it does mean that people are going to feel worse off. And the gamble that the Chancellor is taking is that actually public services can improve.
“Then at least people will have the chance, because of the extra investment and the extra money coming in from taxes, that people will at least feel that they’re paying for something worthwhile.
“And we’re in a situation at the moment where people are paying sky high taxes but not feeling they’re getting the public services that those taxes merit, and that’s the gamble.
Theo Underwood blasted the Budget
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GB NEWS
“But having said all of that, the other analysis that I thought was interesting from the IFS, they’re making the point that she’s actually back loading the pain.
“The economy is in such a dire state at the moment, that all the really difficult decisions are being put off towards the end of the Parliament.
He added: “It’s a hell of a gamble. It’s big.”
Average disposable income, the amount people have left after tax, is set to grow by only 0.5 per cent a year over the next five years, according to the Government’s official forecaster.
Rachel Reeves announced her Budget this week
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POOLAs reported by BBC, IFS director Helen Miller said the rise in National Insurance, the limit on salary-sacrifice pension contributions and the frozen tax thresholds together amount to breaking Labour’s promise not to increase taxes on working people.
The Prime Minister told the BBC that Labour had “kept a number of commitments” made in its manifesto.
The IFS says disposable income per person is now expected to increase by around £104 a year for the next four years, based on current inflation projections.
“Before this Budget, the UK was already facing weak growth, stalled living standards and huge fiscal pressures,” Ms Miller said.
“And all of that remains true after this Budget.”
Her assessment was echoed by the Resolution Foundation, which warned that living standards during this Parliament are on track to see the second-weakest growth since records began.
In the run-up to last year’s general election, Labour pledged not to raise taxes on “working people”, explicitly naming National Insurance, Income Tax and VAT.
The Prime Minister acknowledged that he is asking “everybody to make a contribution”, insisting the move is both “fair and necessary.”