Hunt hurting women

Credit: Pete Price

Ignacio Pinto says Hunt’s Spring Budget is another blow to women and the economy

The Spring Budget 2024 was supposed to be a “budget for long-term growth”, in the words of the Chancellor Jeremy Hunt. Yet his announcements fell far short of such promises. Instead of a forward-looking strategy for sustainable and long-term prosperity, what we saw was a shortsighted focus on tax giveaways, with little to no regard for the challenges facing our economy and our vital public services. At the Women’s Budget Group, we argue that social infrastructure, including health, education, social care and social security, is at the core of our economy and indispensable for tackling gender inequality.

Replicating what he did in the Autumn Statement 2023, Jeremy Hunt announced a two percentage point cut to national insurance contributions (NIC) paid for employees and the self-employed. Those set to benefit from these tax reductions are working-age adults earning or making profits above £12,570 annually—the threshold at which NIC payment starts. Due to greater caregiving responsibilities and the unequal distribution of unpaid care and domestic work, women are more likely to work part-time and earn lower incomes. So, of those who earn less than £12,570 a year and will not see any increase in net pay on their payslip, nearly 70% are women. Analysis by the Women’s Budget Group by household type shows that lone mother households will benefit the least from these tax cuts, with £85 more per year on average, while a household with a couple and no children will get around £600 more on average. At a cost of £10.5bn per year, this decision favours the better-off, offering little relief to households at the sharp end of the cost of living crisis

While spending commitments exist for the NHS, Defence and other areas beyond 2025/26, the Chancellor remained silent on the financial future of “unprotected” departments. The Government’s spending watchdog, the Office for Budget Responsibility (OBR), gave a grim prognosis, estimating that these so-called unprotected departments will face a real-term cut of 2.3% per year after 2025/26, including local government. Many local authorities are already grappling with severe financial strains, slashing vital services as a result. Birmingham City Council has stripped back social care as well as non-statutory services and is directly cutting up to 600 jobs. Coventry is among several councils reducing or cutting life-saving services for survivors of domestic and sexual abuse and their children and Nottingham City Council has cut social and youth services. These reductions in local government budgets disproportionately impact women who face a “triple whammy”: women are more reliant on local services, constitute the majority of the workforce in this sector, and often step in to fill the gaps left by reduced public services through unpaid work. Instead of tax giveaways, the Chancellor should have allocated more resources to public services, especially local governments as key actors in supporting women and low-income households.

The Chancellor also announced an increase in the threshold of the High Income Child Benefit Charge, raising it from £50,000 to £60,000. Additionally, the taper rate of the charge will be halved, meaning Child Benefit will not be fully repaid until one earner within a household earns £80,000. This change will be a relief to many parents, especially lone mothers, who are currently missing out on what should be a universal benefit for children. However, this alone is not enough to fix the issues with the current Child Benefit or child poverty.  The latest numbers from the Department for Work and Pensions (DWP) show record-high levels of child poverty in the UK, with 4.3 million children now living in relative poverty. To truly address this emergency, the High Income Child Benefit Charge should be abolished altogether and Child Benefit return to its universal nature, alongside the removal of punitive sanctions such as the two-child limit, the benefit cap and the “No Recourse to Public Funds” policy for new migrants. These measures would lift many children out of poverty and promote financial inclusion.

Another measure announced by the Chancellor was the abolition of the “Non-dom” status. This is something we and many other organisations have long been advocating for and is welcome. However, in the face of ever-increasing economic disparities, a more significant reform of our tax system is needed to make it more progressive and include proper wealth taxation. Directly taxing wealth would help generate more revenue to finance the public services that we all rely on and are essential for advancing gender equality.

Ultimately, the health of our economy hinges not on tax incentives, but on the strength of our public services. Without top-notch healthcare, high-quality early education, social care, accessible and affordable transport and other public services, it will be impossible to move towards a long-term prosperous economy and ensure our collective wellbeing. It is urgent to prioritise investment in social infrastructure, the foundational pillar of our economy, alongside promoting policies to tackle the climate emergency. Such a strategy will shield future generations from the spiralling costs of environmental degradation and deteriorating essential services. This investment is essential for immediate economic improvement and for fostering the type of sustainable, equitable, green and caring economy we aspire to.

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