In the News Teaching Activity – Autumn Statement tax cuts announced though households may not feel the benefits (Nov 2023)

Headline-grabbing reduction in employee national insurance contributions in the Autumn Statement, but a poor outlook for households’ real disposable income

Alongside the Spring Budget, the Autumn Statement is the time when the Chancellor of the Exchequer makes big fiscal policy announcements. As an election approaches, these choices typically become more politically driven. Some newspaper headlines picked up on the NIC tax cuts while others focused on the longer term rise in the tax burden. The government has benefitted from fiscal drag helping it raise more tax revenue in inflationary times, but the announced tax cuts mean it is still likely to need to find further savings from cuts in public spending, which could affect the quality of public services at a time when the NHS is already under pressure and schools are crumbling. There are trade-offs. In this report, the Resolution Foundation sum up their key findings – they are concerned that falling real household disposable income has made a typical household £1,900 less well-off between the last election in 2019 and the forthcoming one in 2024. How much will this matter when people get the chance to vote next year?

A pre-election Statement • Resolution Foundation

1 What is ‘fiscal policy’?

2 According to the key findings in the Resolution Foundation report, how have the Autumn Statement measures affected the distribution of income?

3 Analyse the impact of falling real household disposable income on the macroeconomy.