The Autumn Statement Won’t Reduce Inequality

On Monday we outlined our wish-list of policies for today’s Autumn Statement. Let’s start with the good news.

The Government’s commitment to reduce the rate at which Universal Credit is withdrawn is a welcome intervention, and a policy we’ve long advocated. Struggling recipients will be glad to see a little more money at the end of the month. That said it is only a little – reducing the withdrawal rate from 65p to 63p of every additional pound earned will be worth less than £8 per month for someone working 80 hours, and £16 for those working150 hours. We’d like the Government to go much further, with our recommendation of a 55p withdrawal rate paid for by freezing the planned increase in the personal allowance.

Another welcome measure is the ban on letting agent fees. As many others have noted, letting agent fees are exorbitant, totalling around £337 for a tenancy, sometimes for little more than printing a contract. This is a huge cost for those struggling with housing costs in the private rental sector. We will, of course, hear the usual bleating from vested interests that costs will be passed on to landlords and ultimately renters, but that is not the experience in Scotland, where a similar policy has been rolled out. This is a positive policy that will benefit many on low incomes.

The planned increase in the minimum wage is also welcome. Although this is now below the £7.60 needed to inch towards the expected £9 per hour by 2020, it is still an important measure to move those on low incomes closer towards a genuine living wage.

Other positive policies include tackling salary sacrifice schemes which let many reduce their tax bill and cracking down on other tax reliefs being exploited by people on high incomes

A final important win is the reinstatement of the distributional analysis, which shows how households with different incomes are affected by the decisions taken in the Autumn Statement. The Equality Trust has led the campaign for its reintroduction, and we are pleased to see its reintroduction. That, however, leads to the bad news.

The continuation of existing policies means that, across this Parliament, the distributional analysis shows that tax and spending changes will hit the poorest and most vulnerable hardest. The Government’s decision to increase the 40p and personal allowance thresholds will benefit the well-off most. These are not policies that benefit the many, and are unforgiveable given the burden of cuts borne by the most vulnerable in society. We urge the Government to reconsider these sops to the wealthy.

Then there are the irresponsible omissions. Our housing crisis is well documented, and we look forward to seeing the Government’s housing white paper. Our expectation is that it includes measures to vastly improve the regressive nature of Council Tax, ideally through a progressive property tax. This is vitally important to reduce wealth inequality. Equally important of course is a major house building programme, including the development of social housing – desperately needed for those on low incomes to enjoy a decent roof over their heads and a sense of security and stability.

At best, it’s a mixed bag from the Chancellor, with some good and bad policies. However with previously announced policies, the overall effects will not reduce inequality. If the Government wants to build an economy that benefits everyone, it needs a drastic rethink, and a focus on policies that reduce our extreme levels of inequality.

Dr. Wanda Wyporska,

Executive Director