My take on the mini-Budget 23-09-2022

We were anticipating big changes that would make financial adjustments to help the most vulnerable in terms of exposure to high inflation including the cost of energy.

The impact appears to be that those on highest incomes have become better off and the modest reductions of tax having minimal impact on those that struggle to make ends meet. My views are not coloured by political allegiances because I remain Independent and comment as I see the situation.

The recipients of very high incomes also benefit from the reduction in basic rate income tax from 20% to 19%, they also benefit from the scrapping of an additional income tax charge, and while I understand that as their salary crosses the thresholds at which personal allowances are eroded and contributions to tax efficient pensions take place – these were there before the mini-budget, so they are not being asked to bear any greater load.

On the other hand, the income tax simplification from 45% to 40% can only benefit higher income earners above £150,000. I understand that these individuals already contribute more than most in tax, but reducing their liability appears to me as a perverse way of helping lower paid families.

The logic trotted out by some ‘talking heads’ is that these are entrepreneurs that will employ more staff and drive up the economy. There is little evidence that this is the case and certainly I have seen no short-term evidence in the past. Others maintain that with lower tax rates result in higher tax receipts because individuals are less likely to spend in ways to avoid tax. I understand this also, but the message is that they don’t waste money on saving tax when the government will do it for them free of charge.

Will banning Banker’s bonusses (incentivised for closing branches) result in greater employment opportunities in the Fens? Reversing corporation tax, that few complained about and was not planned to become effective until April 2023, will have no impact on this Winter’s finances.

𝗦𝘁𝗮𝗺𝗽 𝗗𝘂𝘁𝘆 𝗮𝗻𝗱 𝗟𝗮𝗻𝗱 𝗧𝗮𝘅.

First time buyers already had a threshold under which was duty free up to £300,000. This will be increased to £425,000 – around London I anticipate this will be helpful for those able to contemplate a purchase of this magnitude – however the first rung on a property ladder in Fenland is unlikely to be anywhere close to that value, many people are focussing on about half that price, and those looking over £250,000 tend to be those that have already bought their first home – so who will this really benefit?

What should the government be doing to reduce the long-term impact of high energy costs? For domestic heating they should make it easier to insulate their homes affectively which will have short- and long-term benefits. Our housing stock does not boast high energy efficiency, and current standards for new properties are inadequate.

We should be helping people to become self-sufficient by installing domestic solar panels with battery storage and modest wind turbines so that in a range of weather conditions there will be less reliance on fossil fuels.

We should encourage the use of energy efficient appliances that are smart enough to work when surplus cheap energy is available. We should educate families about why tariffs featuring smart technology can help them.

As we move towards electrification of transport, we should reduce unnecessary travel and charge vehicles at times that will mop up surplus generation from domestic solar panels and any time the wind is blowing.

So, in conclusion, I am not convinced that the measures taken on Friday 23rd September 2022 were sufficiently ambitious and are unlikely to have the desired impact. The government must do better.