Torsten Bell Profile picture
Jul 7, 2021 8 tweets 3 min read Read on X
This is political and economic madness bbc.co.uk/news/uk-politi…
Cutting the incomes of 6 million households by £1,000 a year from October is a huge hit to family incomes just as the recovery is getting going. The poorest households in the country will see their incomes fall by 5% overnight
Even if you somehow think (despite widespread food insecurity amongst poorer families) that the current level of benefits is too high, here's three reasons why the context of this Autumn means a huge cut isn't a good idea
1) we'll be cutting incomes just as an inflation spike is pushing up the cost of living. We think inflation could be hitting 4% by the end of the year. That is going to drag on household incomes just as we're hoping the recovery will be getting going - doing this on top = unwise
2) the households seeing their incomes hit by this are very different households to the ones who have seen their savings increase loads during the pandemic. So don't tell yourself people can just use their new savings to compensate for the income fall
3) This recovery will be more bumpy than current boom rhetoric implies. Some sectors need to shrink as others grow (e.g household goods sales need to fall a lot if hospitality/holiday spending is to recover) and unemployment is likely to be rising just as this cut takes place.
Of course keeping the £20 costs billions. & those billions will need to be paid for via tax eventually. But scrapping it while we're getting the recovery established and household incomes face headwinds (having been protected mid-crisis) is what you'd politely call unwise
It also undermines what has been one of the government's success stories of the pandemic: protecting incomes on average (especially those of poorer households) from the huge fall in GDP

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More from @TorstenBell

Nov 25, 2024
Here’s a short story about who wins and loses from the status quo of our inheritance tax rules - and about, what you might politely call ‘sub-optimal’ journalism🧵
On 19 November, the Times ran a ‘news’ piece on the demonstration in Westminster by farmers opposed to changes to inheritance tax. Obviously reporting the news is good, but reading such a one sided piece made me think it belonged in the comment pages thetimes.com/uk/environment…
In it they tell the story of John Kemp-Welch. Here’s how he’s described: “Kemp-Welch, 88, who owns 5,000 acres of "difficult hill farming land" in Perthshire where he and his children farm blackface sheep.” Image
Read 13 tweets
Nov 19, 2024
So much misinformation around today on who will be affected by changes to inheritance tax - and lobbyists pretending the data isn't clear to obfuscate. We have detailed data on estates so the truth is in fact very clear if you care to look 🧵
If what you care about is just agricultural property, 84% of claims for relief are for less than £1.5m (which realistically is the minimum you'd have to have in assets including a farm before you start paying any tax). 96% are less than the £3m couples will still pass on tax free Image
Some farms include wider business assets - but even then 78% of claims are for less than £1.5m and 93% for less than £3m Image
Read 5 tweets
Nov 4, 2024
Not news = those hugely benefitting from a tax exemption, despite never being the intended beneficiaries, are opposed to reform of that tax exemption
It takes a special kind of nonsense speak to claim the way to protect future generations of farmers is to provide a large tax incentive for non-farmers to buy up land, pricing actual would be farmers out. That is exactly what the status quo does
It's also totally untrue that a farm worth 'only £1m' will be affected. A couple passing on a farm + farmhouse worth £3m will remain entirely exempt from inheritance tax
Read 6 tweets
Oct 24, 2024
Today @RachelReevesMP has swept away one of the biggest weaknesses in the UK’s macroeconomic framework: the bias against public investment. It’s a very big deal.
This means this government will avoid the huge falls in public sector investment planned by the last government, but it’s a bigger deal than just shaping next week’s Budget…
…because the new fiscal rules reshape the Treasury’s incentives - removing the short term incentive to cut investment to pay for tax cuts or fiscal shortfalls. Those pressures have driven our disastrously low and volatile levels of public investment for over 4 decades
Read 7 tweets
Jul 24, 2024
Understandably lots of debate about child poverty this morning – something we as a country should spend much more time focusing on
The context here is the first Labour Kings Speech in 14yrs – implementing a manifesto just endorsed by the election result. No-one should be surprised that 98+% of Labour MPs voted for it/against amendments from other parties. That’s business as normal just days after an election
More importantly we shouldn’t confuse parliamentary procedure with what actually matters - reducing child poverty, something I’ve spent my life working on – in the last Labour government (which did exactly that) and ever since.
Read 11 tweets
Jul 8, 2024
The case for @RachelReevesMP’s sweeping changes to the planning system announced today…
1. For 15yrs, we’ve been attempting to dig a tunnel under the Thames. No digging has taken place, but £800m has been spent & 9k pages of planning applications drafted. This is double what Norway spent actually building Lærdalstunnelen, the world’s longest road tunnel… Image
2. If we want net zero to happen, and to happen without higher costs, then things are going to have to be built. Things that not everyone loves. And they will also have to be built if we want our firms to be able to invest, grow and pay higher wages
Read 5 tweets

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