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Paul Johnson, director of the Institute for Fiscal Studies thinktank, has delivered his considered verdict on the spring statement at a briefing.
He dismissed Rishi Sunak as a “fiscal illusionist” and warned that public sector workers face “hefty” real-terms pay cuts in the future under Sunak’s plans. He said:
Mr Sunak has proved to be something of a fiscal illusionist. He told us that he cut taxes yesterday. In a sense he did. He increased the floor for NICs and promised a cut in income tax in 2024. So Mr Sunak’s statement contained big new tax cuts. But it also allowed taxes to rise. He can now expect to raise more in tax as a share of national income by 2025 than he expected last October. In fact, taxes are set to rise to their highest level as a fraction of national income since Clement Attlee was prime minister. Not my comparison, that comes directly from the OBR.
[Sunak] is also effectively cutting spending on public services in real terms relative to previous plans. Yesterday he offered them no extra cash at all to deal with higher inflation. The exact scale of this cut relative to previous plans is a little uncertain, but it is significant. It will almost certainly mean some more hefty real pay cuts across the public sector, coming on top of cuts both in real terms and relative to the private sector over the last 12 years.
This is a tax raising chancellor. The tax burden is the highest it’s been since the 1940s.
The chancellor can say as many times as he likes that he’s a tax-cutting chancellor but it’s a bit like a kid in his bedroom playing air guitar – he’s not a rockstar.
The problem is for this chancellor, is that by the end of this parliament seven out of eight people will be paying more taxes – only one in eight will be paying less taxes.
That’s a disaster for working people, for the poorest people in society who are struggling with rising food prices, rising petrol prices and most of all the big increases in tax and electricity bills.
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