Earlier today, Rachel Reeves presented her second Autumn Budget as Chancellor of the Exchequer.
The Budget included welcome announcements to help tackle the rising cost of living such as increases in the national living and minimum wages and energy bill support. These measures will help to support women in Wales who tend to earn less than men, who tend to have fewer savings and who continue to be hit hardest by rising costs.
We were particularly pleased to see the removal of the two-child limit in today’s Budget, a key driver of child poverty which stands at 31% in Wales. Abolishing this arbitrary limit will lift over 54000 children in Wales out of poverty and provide vital support to low-income families with more than two children. Removing the two-child limit will also support single parents in Wales – 80% of whom are women – who remain the most likely household type to be living in poverty here (35%). It is worth noting, however, that this vital support will be curtailed by the benefit cap, which remains in place and limits the amount of benefits a household can receive. To effectively reduce child poverty and support the most vulnerable families across the UK, this policy must also be removed.
Due to their unequal economic position, women rely more on public services than men. They are also more likely to work within them and to become providers of last resort when services are cut or scaled back. While we welcome the Chancellor’s announcement of an extra £500 million in consequential funding for Wales, we are concerned that this will not go far enough to support Wales’ struggling public sector. With demand outstripping resource in social care and housing and continuing shortfalls within the local authorities who provide these services, women in Wales will be hit hardest by these pressures. In this context, the focus on investment in fiscal and physical infrastructure as opposed to social infrastructure in today’s Budget is disappointing.
It is also disappointing that the Chancellor’s biggest revenue raising decision was to extend the freeze on income tax thresholds. This measure will result in women and other low income groups paying more tax, reducing their disposable income and largely offsetting the cost of living support measures also announced today. In Wales, where the majority of tax payers pay the basic rate of income tax, this policy raises a disproportionate amount of revenue from lower earners.
While the Chancellor announced more progressive taxes in England in the form of a new mansion tax, she fell short of taxing wealth more equitably across the UK. As discussed in our podcast WWBG Explains, a 2% wealth tax on assets over £10 million would affect just 0.04% of the UK population, yet it would raise £24 billion for UK public services. Today’s Budget represents a regrettable missed opportunity to implement a UK wealth tax, which would close the gender wealth gap and adequately support our public services.