Families face near £5,000 bombshell from Autumn Statement

A typical family could face an eye-watering £4,900 triple whammy hit from today’s Autumn Statement, analysis by the Liberal Democrats has revealed.

The research shows the combined impact of expected stealth taxes, energy bill rises and mortgage bill hikes next year. In the year 2022/23, a typical family of two basic rate taxpayers with a mortgage will face a total hit of nearly £5,000.

The party’s research has shown that there would be an additional £680 a year in income tax, due to the freeze of the personal allowance. Households could also face an increase of £1,200 a year in their energy bill, once the energy price cap is unfrozen in April.

Finally, due to Liz Truss and Kwasi Kwarteng’s disastrous mini-budget, a typical family will see an annual increase of around £3,000 in their mortgage payments, due to soaring interest rates in the aftermath of the mini-budget.

Ahead of the Autumn Statement on Thursday, the Liberal Democrats are calling on the Government to put a proper windfall tax on the profits of the fossil fuel giants. They are also calling for the Introduction of a new Mortgage Protection Fund and to increase pensions and benefits at least in line with inflation.

Liberal Democrat Treasury Spokesperson Sarah Olney MP said:

This budget will bring cold comfort to our country. After inflicting so much chaos, the Conservatives are making the rest of us pay to clear up their mess.

Under the Conservatives, the squeezed middle is set to be clobbered with a barrage of bills.

Mortgages have skyrocketed, the economy has tanked and Downing Street is nothing more than a revolving door of chaos. Every day the Conservatives are in office, families and pensioners across Britain suffer.

We need a fair deal, including support for those struggling with their mortgage payments and a boost to pensions and benefits. The government should bring in a proper windfall tax and make sure banks pay their fair share, instead of imposing years of painful stealth taxes on ordinary families.

Income tax: As a result of the two-year freeze of the Personal Allowance, a basic rate taxpayer will be £340 pounds worse off in 2022-23. Next year the Personal Allowance will remain at £12,570. Whereas without the stealth tax, it would have stood at £14,270. The resulting tax hit is £340 for a single basic rate taxpayer. Full calculations can be found here.

Energy bills: The government has confirmed that their Energy Price Guarantee will end in April 2023 and the price cap mechanism will return. Under the Energy Price Guarantee the average bill is £2,500. Energy experts Cornwall Insight predict that the price cap in Q2 of next year will be £3,702 for the average household. That means that average bills will increase by £1,202.

Mortgages: In its latest Monetary Policy Report from this month, the Bank of England said that the typical household exiting a fixed-rate deal this year will face a hit of around £3,000. See page 53 of the report. Around a quarter of mortgages will reach the end of their fixed term between now and the end of 2023. Among those mortgagors, the Bank said that the median outstanding balance is around £130,000, with an average remaining term of around 20 years and an average interest rate of around 2.0%. According to the Bank, a typical increase of 3.5 percentage points in the mortgage rate (taking it to 5.5%) would add £3,000 to the annual bill.

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8 Comments

  • Helen Dudden 17th Nov '22 - 5:41am

    But what can we do? Do we just accept what is happening? I think their needs to be some thoughts and actions.
    I have noticed my bungalow is getting damp, I tried to save money on heating. Not highly practical.
    A child dies of mould and the damage this can do to health. Is it just another?
    Jeremy Hunt is busy trying to finish off the NHS, can you remember his previous tries?
    I can’t sleep, my thoughts go to this child and all the other children and families who are suffering.
    For a few weeks I have had many photographs of those put into the Holocaust. From babies to adults, from the disabled to the originally healthy.
    A Jewish friend once told me, how they longed for warmth, he lost many of his family.
    For me, it;s something I take seriously, the bitter cold.

  • Steve Trevethan 17th Nov '22 - 7:53am

    As well as abandoning Neo-liberal socio-economics, which is a root cause of our problems, we might:

    Present data which shows that inflation decisions need the differentiation of inflation factors

    Emphasise that approximately 30% of the population who cannot afford sufficient food for their children do not have too much money

    State that Inflation will inevitably fall next year as it is a year on year measurement. This year’s figures compare post conflict figures with pre-conflict figures. Next year will see the comparison of two conflict figures.

    State that tax havens reduce the tax pool considerably and distort society

    State that the taxation of directly and indirectly earned incomes needs to be appropriate

    State that the excessive and extractive profits of fuel companies require a greed tax not thé nice feeling windfall tax

    State that HMG needs to put money into the needful parts of society and not take it out

    State that we do not have a general pay based inflation

    State that the money extracted by bank rate increases should go into the public purse

  • Jenny Barnes 17th Nov '22 - 9:49am

    “eye-watering”= “big”

  • On another thread it was mentioned that the electorate aren’t stupid. The latest poll shows that the electorate still think the Conservatives are more to be trusted with the economy than Labour.

    ??????

  • Peter Davies 17th Nov '22 - 2:04pm

    Can anyone think of a good reason why we would put out a critique of the budget a few hours before it is delivered when a) we obviously don’t know what we are talking about and b) we stand no chance of being reported? This would be a better time to put out some positive proposals for the chancellor to ignore.

  • Peter Watson 17th Nov '22 - 2:11pm

    “there would be an additional £680 a year in income tax, due to the freeze of the personal allowance”
    Isn’t that only true if their income is going up by a significantly greater amount (i.e that £680 is 20% or 40% of the increase in their income), leaving them with more money to cover some of the other costs listed?

  • Rapidly increasing mortgage payments and rents are likely to generate a serious recession in the near future and potentially a housing market crash. The traditional Liberal solution was to have a calculation of the land rent, as opposed to what it costs to build a building. We all know that if you build a building the contractor and the builder or developer have to make a profit, but if the government will tax the land rent, then it will not be available to the banks to extract as interest.
    So, if you tax the land rent, then the land rent is not going to be capitalized into a bank loan, and housing prices will be kept down to the actual cost of construction plus normal profits. And as housing becomes more desirable, or as the economy becomes more profitable, or as cities build more transport infrastructure and public amenities and the rental value goes up, the taxes will go up. That will prevent this increased rent from taking a financial form and will simply be the source of a government revenue. It requires a tax system to tax away the economic rent, so that housing does not reflect the speculation and the economic rent that is caused by the financialization of the housing market that’s been occurring since the 1970s.
    This requires taxation of the super-profits (economic rents) generated in the financial sector on mortgage lending and recycling into public housing and public amenities.

  • Jason Connor 18th Nov '22 - 11:18am

    Helen it’s worth you , your neighbours and friends, if applicable, applying to your Council’s ‘Household Support Grant or Fund’. These monies were given by the government to Councils to support vulnerable residents who are struggling. You’ll probably find the details hidden on your Council’s website. I only find it on mine by doing a search. I agree the privatisation of some NHS services is concerning though the govt. are increasing spending on it in this budget. Hospitals are still having to pay back the PFI started by John Major and expanded by Labour when last in power.

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