The Mayor of London Sadiq Khan has revealed today that the Chancellor of the Exchequer’s plans to cut Income Tax and abolish the social care levy would disproportionately benefit the most wealthy in society.
Sadiq has highlighted new analysis from GLA Economics that reveals that those earning the least would not benefit at all from changes to personal taxation that the Chancellor is expected to set out in tomorrow’s Fiscal Statement.
The findings, show that abolishing the social care levy, and introducing a 1p cut in income tax would lead those earning £150,000 taking home an additional £1,950 a year.*
An employee with low earnings of approximately £11,000 a year, would gain nothing from these changes.
The Mayor revealed this new analysis as he called on the Chancellor of the Exchequer, Kwasi Kwarteng to deliver a Fiscal Statement that will hone in on supporting the least well off in society during the cost of living crisis.
The Mayor of London, Sadiq Khan, said: “Tomorrow’s Fiscal Statement is a chance for the Government to introduce a package of measures that will make a tangible difference to millions of Londoners struggling to make ends meet during this cost of living crisis.
“Rather than focussing on unfunded tax giveaways for the most wealthy, we need to see immediate and comprehensive help for those who need support the most.
“The Chancellor should provide free school meals to all primary school children, uplift Universal Credit in line with inflation and introduce a Lifeline Tariff to ensure that the most vulnerable members of our society receive a basic amount of free energy every day. The Government should also give me the power to freeze private rents in the capital, which would save people £3,000 over two years.”
Notes to editors
*Tax change estimates are for employed individuals using Government income tax rates and allowances, and national insurance rates, for 2022/23.
GLA Economics analysis is available at https://www.london.gov.uk/business-and-economy-publications/pre-fiscal-announcement-analysis-possible-personal-tax-changes
The Mayor is calling on the Chancellor to introduce the following support tomorrow to tackle the cost of living crisis:
Support for households
- Introduce a ‘Lifeline Tariff’ to ensure energy support for those who need it, providing a minimum floor of domestic energy use before charges begin.
- Help for households to insulate their homes.
- Increase the income threshold for households that can benefit from grant programmes such as the Energy Company Obligation and Sustainable Warmth.
- Increase the one-off cost of living support grant for people in receipt of disability Benefits.
Support for business
- Introduce a permanent lower rate of 12.5 per cent VAT for hospitality and leisure businesses , in line with other European countries, to encourage people and visitors back to city centres and ease pressure on consumers.
- Continue the fifty per cent relief scheme for ratepayers in the retail, culture, leisure and hospitality sectors for a further year and increase the £110,000 maximum cap on support per business to at least £250,000 for genuine small and medium sized firms.
- Increase the rateable value threshold below which small businesses receive 100% rates relief from £12,000 to at least £22,000.
- Ensure that the capital’s arts organisations are no longer excluded from vital sources of funding and are included in the 2023-26 National Portfolio Spending Round to at least pre-pandemic levels of funding.
Wider cost of living support
- Provide the Mayor with the power to freeze private rents in London, which could save renters an average of £2,988 over two years.
- End the benefit cap so support can reach all those who need it.
- Deliver on the previous government’s promise to increase benefits in-line with inflation from April 2023, and go further and uprate the Local Housing Allowance rates to reflect changes in market rents.
- Extend the provision of Free School Meals to all primary school children; increase the funding per-pupil in recognition of inflated food costs; and restore the school holiday meal voucher system for low-income families.