- All parties rule out VAT hike
- North Sea jobs pledge by Labour
- Incomes lag under Tory governments
- Who's best for the markets?
Income growth lags under Tories says new report
Income growth in Britain lagged significantly behind most of its main competitors during the period when the Conservatives were in power, a new study has found.
According to the Institute for Fiscal Studies (IFS) median incomes in Britain grew by 6% between 2007 - at the onset of the global financial crisis - and 2019, before the COVID-19 pandemic.
By comparison, incomes rose by 12% in the US and 16% in Germany.
In a blow to Rishi Sunak’s election campaign, the IFS said there had been no improvement in the UK’s relative performance since the pandemic.
"Although there has been a widespread slowdown in growth internationally since the financial crisis, the UK has fallen from being one of the fastest growers prior to the Great Recession, to one of the weakest performers," Tom Waters, an associate director at IFS, said.
The only crumbs of comfort were that France, Spain and Greece performed worse over a similar period, but they were the only ones out of the fourteen countries looked at.
Sunak has hung his election chances on signs that the UK economy is starting to improve but the IFS said that between 2009/10 and 2022/23 financial years, median incomes in Britain only grew by 6% against expectations of 30% before the global financial crisis.
Britian’s poor productivity record was one reason for the relative performance, said the IFS.
Starmer denies North Sea plans will mean job cuts
Keir Starmer has denied that Labour’s plans to phase out oil and gas production will mean thousands of UK job losses.
No new oil and gas licences will be issued under a Labour administration, but the Scottish Nationalists claim that added to Starmer’s plans to hike up the windfall tax, jobs will suffer.
Noy so, said the Labour leader, who said its proposed new green energy company Great British Energy, would be headquartered in Scotland and mop up ex-oil field workers.
But Starmer did concede that Great British Energy would do after would be an “investment vehicle, not an energy company", an about-turn on previous plans said the SNP.
Labour now has clarified Starmer’s position and said Great British Energy would indeed generate electricity as well as owning and running power projects “alongside private firms”.
Labour and Tories both commit to stealth taxes
Both Labour and the Conservatives promise to keep income tax thresholds frozen until 2028 if they win the general election.
In other words, we can all look forward to stealth taxes, whichever party claims victory.
The Institute for Fiscal Studies has warned of the effects of fiscal drag, suggesting the freeze will result in 4.5 million more people being pushed into higher income tax thresholds by 2028.
Income tax thresholds determine the amount of money individuals must earn before starting to pay tax or moving into higher tax brackets.
These thresholds usually rise with inflation, but most bands were frozen in 2021 by the Conservative government.
Speaking on the BBC’s Today programme, Chancellor Jeremy Hunt confirmed the freeze for the next three years, stating: “A future Conservative government will not increase income [tax] rates and VAT.”
Labour’s shadow chief secretary Darren Jones, also confirmed to the BBC that a future Labour government would freeze income tax, national insurance, and VAT thresholds
A Labour source later clarified that Jones meant rates, not thresholds.
VAT not going up say all main parties
All three main political parties have ruled out a rise in value-added tax (VAT) if they win the general election.
Chancellor Jeremy Hunt wrote in the Telegraph that it would not go up during the next Parliament if the Tories were elected, prompting shadow chancellor Rachel Reeves also to rule it out and say talk Labour would raise it was "nonsense"
Munira Wilson added the Lib Dems would not “look to” raise VAT, income tax or National Insurance in an interview with the BBC.
Claims about tax are playing a key part in the election battle with Reeves having stated no further tax rises are planned by Labour beyond those already announced.
Labour and the Tories have now ruled out increasing VAT, income tax rates and National Insurance in the next Parliament, noted the BBC.
The current government’s plans to freeze income tax thresholds until 2028 are also set to be carried on if Labour wins.
The Institute of Fiscal Studies (IFS) last week said all of the parties were ignoring the realities of the UK’s financial situation and taxes would have to rise whoever wins.
UK supermarket shoppers favour Labour, research shows
Every UK supermarket customer base, barring Waitrose, is made up of a majority of Labour supporters, new research revealed.
Tesco, Sainsbury’s, Morrisons, Lidl and Aldi all saw the majority of their customers swing to Labour from Conservatives since 2019, insights from GlobalData revealed.
Ocado achieved the highest concentration of Labour customers, with 45.2% of shoppers aligning with Starmer’s party, while Lidl and Iceland followed in close second with 45.1% and 45%, respectively.
Waitrose was the only supermarket to have a Conservative majority, albeit only marginally, with 29.6% of shoppers voting Tory, while 28.4% favoured Labour.
Back in the 2019 election, Labour was only favoured by shoppers at Asda, Co-op and Iceland.
Reform UK has also become more popular with customers, with 11.9% of British supermarket customers choosing the party, pushing Liberal Democrats into fourth place.
Co-op shoppers were the biggest fans of Richard Tice’s party, with 23.2% of customers favouring the new political group, outperforming the Conservative’s 22.7% share.
Zoe Mills at GlobalData said: “If supermarkets were seats, Labour would be on course for a landslide victory.
“Conservatives are doing comparatively better at M&S and the Co-op, the only supermarkets where they do not trail Labour by double-digit percentage points, and which they might have held were it not for the emergence of Reform UK.”
Labour receives endorsement from 120 business leaders
More than one hundred British business leaders have come out in support of the Labour Party ahead of July’s general election, arguing the economy needs revitalising.
Some 120 prominent figures such as Wikipedia founder Jimmy Wales, chef Tom Kerridge and former bosses of Heathrow, JP Morgan and Aston Martin signed the open letter declaring their support of the party.
“For too long now, our economy has been beset by instability, stagnation, and a lack of long-term focus,” the open letter published by the Times said.
In a call for change, Labour said it would “partner fiscal discipline with a long-term growth strategy” while also leaning on the private sector to “drive innovation and investment”.
“Labour has shown it has changed and wants to work with business to achieve the UK’s full economic potential. We should now give it the chance to change the country and lead Britain into the future,” the letter added.
Other signatories included JD Sports chair Andrew Higginson, Iceland founder Malcolm Walker, ex-FCA chair Charles Randell and Rachel Carrell, the founder of Koru Kids, the company which Sunak’s wife once held shares in.
Tories promise to keep pensions below tax threshold
Pensioners will never pay tax on their state pension under his government if it wins the next election, Prime Minister Rishi Sunak promised today.
Having already guaranteed to maintain the “Triple Lock” if he is returned to power, Sunak added that the personal allowance for pensioners would increase by at least 2.5% or in line with the higher of earnings or inflation.
Currently, state pensions rise by whatever is the higher of average earnings, wages or by 2.5% - the “Triple Lock”.
After the surge in inflation last year this year’s rise was 8.5% and on current trends, the state pension is on track to exceed the minimum threshold for paying income tax by 2027.
Sunak said raising the threshold level so the state pension is always below would save pensioners £275 by 2020.
According to the Conservatives, the cost will be £2.4bn a year by 2029-30, funded by better tax collection and a crackdown on evasion.
Sunak said: "I passionately believe that those who have worked hard all their lives should have peace of mind and security in retirement.
"Thanks to the Conservatives' Triple Lock, pensions have risen by £900 this year and now we will cut their taxes by around £100 next year.
Labour’s shadow chancellor Rachel Reeves called the scheme a "desperate gimmick".