A new ‘explainer’ from Understanding Society sets out how living standards think tank the Resolution Foundation used several data sources including ours to assess the impact of the Budget. Their briefing note, Stairway to headroom, said the Chancellor “faced a tough task to clear three big hurdles – fixing the public finances, easing the cost of living squeeze on families, and taxing smartly and fairly”.
Labour’s 2024 manifesto promised not to “increase taxes on working people”, such as Income Tax, and National Insurance, but it needed to raise tax revenue to increase public spending. The Resolution Foundation used our data (alongside Households Below Average Income, the Living Costs and Food Survey, and the Wealth and Assets Survey) to look at whether the tax changes the government did introduce were progressive and benefitted poorer households.
The findings showed
- incomes for households in the bottom half of the distribution increasing by 1%
- incomes for households in the top half falling by 0.7%
- an average increase in income of £360 for households in the poorest fifth of the distribution by scrapping the ‘two-child limit’
- freezing Income Tax and National Insurance thresholds until April 2030 will “hit the richest households hardest in cash terms”.
The briefing also says that tax and benefit measures announced since July 2024 will benefit children, and that the new road pricing scheme for electric cars should put motoring taxes “on a fairer and more sustainable footing”.
