Resolution Foundation
@resfoundation

The Resolution Foundation is an independent think-tank dedicated to lifting living standards in the UK.

 London
linktr.ee/resfoundation
Joined August 2009
This parliamentary term is on track to be by far the worst for living standards since the 1950s. Typical working age household incomes are on course to be 4% lower in 2024-25 than they were in 2019-20. Never in living memory have families got so much poorer over a parliament.
Graph showing Total real growth in non-pensioner equivalised household disposable income, after housing costs, by parliament: GB/UK

ALT Graph showing Total real growth in non-pensioner equivalised household disposable income, after housing costs, by parliament: GB/UK

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Who gains most from the Chancellor's income tax cuts next year? The richest tenth of households are overwhelmingly the biggest winners
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Middle income Britain stands to lose most from the overall impact of all tax and benefit policies announced over the parliament. The poorest fifth of households gain £90 on average, with the middle fifth losing £780, and only the top five per cent gaining significantly (£2,520).
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British households are on course to be poorer going into the coming election, than they were coming out of the last one. This Parliament looks set to be the worst on record for household income growth... 👇
Chart showing total growth in per capita real houshold disposable income, over parliament

ALT Chart showing total growth in per capita real houshold disposable income, over parliament

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This parliamentary term is on track to be by far the worst for living standards since the 1950s. Typical working age household incomes are on course to be 4% lower in 2024-25 than they were in 2019-20. Never in living memory have families got so much poorer over a parliament.
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Labour's plans would mean the size of the state growing to a mid-table European size. This is not radical from an international perspective, but is radical given Britain's recent economic history.
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Cutting Universal Credit by £20 a week could drive up relative poverty from 21% today to 23% by 2024-25, while a further 730,000 children would fall into poverty. The decision on UC will help define whether this is to be a parliament of levelling up incomes, or pushing up poverty
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Average annual pay is projected to be £1,030 lower in 2022 than was forecast in the March 2017 Budget. That extends Britain's pay downturn to 2025 - 17 years of lost pay growth
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The Chancellor’s huge package of personal tax cuts will disproportionately benefit London and the South East – with households in these regions standing to gain to three times as much on average (£1,600) as those living in Wales, the North East and Yorkshire (£500) next year.
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NEW Blowing the budget - the RF overnight analysis of the Chancellor's September Fiscal Statement. Here's a short thread of the key highlights ahead of you reading the full 31 page report.... 🧵resolutionfoundation.org/pub…

Mini budget analysis: Blowing the budget

Mini budget analysis: Blowing the budget. Assessing the implications of the September 2022 fiscal statement

resolutionfoundation.org
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If only this were true. A Universal Credit claimant on the National Living Wage will take a home as little as £2.24 from an extra hour’s work. A small increase in working hours will be nowhere near enough to cover the £20 a week cut coming their way next month.
BBC Breakfast
@BBCBreakfast
13 Sep 2021
"£20 a week is about two hours extra work every week, we will be seeing what we can do help people perhaps secure those extra hours” On #BBCBreakfast Work and Pension Secretary Thérèse Coffey says the increase to universal credit was always temporary. bbc.in/3k2swRY
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NEW RF analysis of #SpringStatement2022 - The scale and distribution of the cost of living squeeze means a further 1.3 million people are set to fall into absolute poverty next year, including 500,000 children – the first time Britain has seen such a rise outside of recessions.
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Graduate salaries have stagnated while the minimum wage has risen, leading to convergence between the two. Two decades ago, the median graduate in a ‘graduate job’ had a salary 2.5 times that of a minimum wage worker, by 2023, the typical graduate earned 1.6 times a minimum wage worker.
Chart showing real full-time annual earnings for someone on the minimum wage and different categories of graduates: UK

ALT Chart showing real full-time annual earnings for someone on the minimum wage and different categories of graduates: UK

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Between 2021-22 and 2023-24, the number of people living in absolute poverty is on track to rise by 2.3 million, including 700,000 children.
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New RF data sheds light on what 15 years of economic stagnation have done to our pay and living standards. "This is not what normal looks like. This is what failure looks like, and we urgently need an economic strategy to turn this state of affairs around." says @TorstenBell
BBC News (UK)
@BBCNews
20 Mar 2023
UK wages failing to keep up with costs, according to research bbc.in/3YYjoPy
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Britain needs a new economic strategy to end its stagnation and close its £8,300 living standards gap with its peers. 'Ending Stagnation', the final report of the RF and @CEP_LSE Economy 2030 Inquiry, funded by @NuffieldFound, is published today: economy2030.resolutionfounda…

Ending stagnation - The Inquiry

A New Economic Strategy for Britain

economy2030.resolutionfoundation.org
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Rising incomes at the very top. The scale of tax cuts for the richest five per cent is enough for their incomes to grow by two per cent next year (2023-24). However, the other 95 per cent of the population will get poorer as the cost-of-living crisis continues.
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Our Chart of the Week offers a picture of how living standards have changed for different groups across the past four decades. Read more in the latest Top of the Charts: resolutionfoundation.org/com…
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Tax cuts are not self-funding. The £45 billion of tax cuts announced yesterday would need to increase GDP by 4 per cent over the long-term in order to be self-funding – an implausibly large boost for measures that are more likely to have a marginal long-run effect on GDP.
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From our new report - the living standards crisis will stretch well beyond this winter into next year. Real earnings are forecast to continue falling until at least mid-2023, by which time all real pay growth since 2003 will have been wiped out
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10/11 Here's a summary of some key facts and key recommendations
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Households are set to be poorer by £1,200 on average going into the coming election than they were coming out of the last. This is something that has never been seen in modern British history, says @TorstenBell. Our NY resolution should be to ensure it never happens again. resolutionfoundation.org/pub…
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NEW Scrapping the abolition of the 45p tax rate has reduced the cash gains going to the richest 5% of households from the tax cuts announced in the recent fiscal statement by almost two-thirds. But the package is still regressive. The top 5% still get a quarter of all cash gains.
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Tax and benefit policies announced and implemented since 2010 have been regressive. They have resulted in a reduction in the income of low-income households and and a boost to incomes across the rest of the distribution, especially for the most well-off households.
Chart showing the impact of personal tax and benefit changes since 2010 on whole-population household incomes: UK, 2024-25

ALT Chart showing the impact of personal tax and benefit changes since 2010 on whole-population household incomes: UK, 2024-25

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Cutting Universal Credit by £20 a week will be record breaking for wrong reasons - the biggest ever overnight benefit cut – larger than the Housing Benefit cuts of 1988. Only the disastrous 10% cut to unemployment support at the height of the Great Depression comes close.
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Sunak announced the end of plans to see “property owners forced to make expensive upgrades”. What he didn’t say was which property owners were affected... ...it's landlords. What does them not upgrading mean? Higher energy bills/colder homes for England's poorest families.
Chart showing share of households in each equivilised after housing costs income decile who live in privately rented home with an EPC rating of D or E: England, 2021-22

ALT Chart showing share of households in each equivilised after housing costs income decile who live in privately rented home with an EPC rating of D or E: England, 2021-22

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The Chancellor said falling debt is his key metric for fiscal sustainability. Doing so by 2026-27 would require spending cuts of £35bn in that year, assuming tax rises have been ruled out - broadly equivalent to the public spending cuts announced in George Osborne's 2010 Budget.
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The Scottish Government has pursued a different social security agenda to the UK as a whole. Projections suggest that child poverty in Scotland fell between 2022-23 and 2024-25, while it rose in England. Under current policy assumptions, rates are projected to diverge further.
Chart showing the projected change in proportion of children living in relative poverty across the UK. There is clear divergence between Scotland and the rest of the UK, especially England.

ALT Chart showing the projected change in proportion of children living in relative poverty across the UK. There is clear divergence between Scotland and the rest of the UK, especially England.

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The announced changes to disability benefits will lead to very substantial falls in income for some families. While some families will gain a small amount from the changes, others will lose thousands of pounds a year.
Chart showing Annual impact of changes to PIP and Universal Credit, by family characteristics: UK, 2029-30 Losses will fall on those who no longer qualify for PIP daily living, who will be £3,700 worse off in 2029-30 (in 2024-25 prices) if they are receiving the standard rate or £5,700 worse off if they receive the enhanced rate; those who lose Carer’s Allowance because someone they care for no longer qualifies for PIP, who will be £4,300 worse off; and those who claim UC after April 2026 and receive the new lower UC-H rate, who will lose £2,400. Current recipients of UC-H will have that element frozen from 2026, meaning they will lose £210 by 2029-30. The biggest losses could hit couples with a disabled member and somebody who cares for them full-time.

ALT Chart showing Annual impact of changes to PIP and Universal Credit, by family characteristics: UK, 2029-30 Losses will fall on those who no longer qualify for PIP daily living, who will be £3,700 worse off in 2029-30 (in 2024-25 prices) if they are receiving the standard rate or £5,700 worse off if they receive the enhanced rate; those who lose Carer’s Allowance because someone they care for no longer qualifies for PIP, who will be £4,300 worse off; and those who claim UC after April 2026 and receive the new lower UC-H rate, who will lose £2,400. Current recipients of UC-H will have that element frozen from 2026, meaning they will lose £210 by 2029-30. The biggest losses could hit couples with a disabled member and somebody who cares for them full-time.

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Our new report – Counting the cost – finds that UK households have taken a £1,500 income hit vs expectations since the EU referendum resolutionfoundation.org/pub…
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RF Chief Executive @TorstenBell spoke to @CommonsTreasury earlier today about the #AutumnStatement, and what it means for the government's future spending plans ⤵️
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How are different households likely to fare under the benefit and tax cuts promised in the Conservative manifesto? 💸 The richest fifth of households would gain £1,300 🪙 The poorest fifth would lose £250 under the tax cuts and welfare savings proposed today
Chart showing Impact of tax and benefit changes announced in the Conservative manifesto, by income vigintile, UK: 2029-30

ALT Chart showing Impact of tax and benefit changes announced in the Conservative manifesto, by income vigintile, UK: 2029-30

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Britain will bring in the new year with hefty National Insurance cuts, followed by huge tax rises in April, when Income Tax and NI thresholds will be frozen again. The net effect will see all employees who earn below £26,000 worse off or unaffected, while those above gain.
Chart showing annual gain or loss for employees of a 2p reduction in the main rate of National Insurance plus Income Tax/employee National Insurance threshold freezes in 2024-25: UK

ALT Chart showing annual gain or loss for employees of a 2p reduction in the main rate of National Insurance plus Income Tax/employee National Insurance threshold freezes in 2024-25: UK

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R.I.P. Fiscal conservatism? Borrowing is on course to settle in at 3.4 per cent of GDP in the medium-term. That is 0.7 percentage points higher than the average level under the last Labour government (1997 to 2010).
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Earlier today the justice secretary pointed to a “huge rise in the welfare budget” as justification for benefit cuts to reduce public spending. So, how big has the rise in welfare spending been? 🧵
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The UK is Europe’s most unequal large economy. Our poorer families are now a staggering 27 per cent worse off than their French and German counterparts. Check out this week's Top of the Charts for a hot-to on ending stagnation... ⤵️ resolutionfoundation.org/com…
Chart showing equivalised household net income relative to the UK

ALT Chart showing equivalised household net income relative to the UK

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Today sees a £10 billion National Insurance cut coming into effect. When considered alongside the frozen tax thresholds this April, people earning between £12,570 and £26,000 will gain less – or even nothing – from the rate cut. RF economist @adamcorlett responds ⤵️
Adam Corlett, Principal Economist at the Resolution Foundation, said: “The Government is keen to cut taxes ahead of the General Election later this year, and is going big today with a £10 billion National Insurance cut that will save 29 million workers up to £750 a year. “Targeting workers via cutting National Insurance is a smarter choice than the options of cutting Income Tax or Inheritance Tax. But for many – particularly those earning less than £26,000 – the tax cut today will be offset by the tax rise that is effectively coming in April, when personal tax thresholds are frozen again. “Although further tax cuts are likely in the Spring Budget, this will remain a tax rising parliament, while funding for tax cuts largely rests on implausible public spending cuts pencilled in for after the next election.”

ALT Adam Corlett, Principal Economist at the Resolution Foundation, said: “The Government is keen to cut taxes ahead of the General Election later this year, and is going big today with a £10 billion National Insurance cut that will save 29 million workers up to £750 a year. “Targeting workers via cutting National Insurance is a smarter choice than the options of cutting Income Tax or Inheritance Tax. But for many – particularly those earning less than £26,000 – the tax cut today will be offset by the tax rise that is effectively coming in April, when personal tax thresholds are frozen again. “Although further tax cuts are likely in the Spring Budget, this will remain a tax rising parliament, while funding for tax cuts largely rests on implausible public spending cuts pencilled in for after the next election.”

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Replying to @resfoundation @bankofengland @econ_SPE
The UK has managed to combine lower consumption (see Silvana's chart) with a more entrenched inflation problem than the US and Eurozone (next chart in Silvana's presentation). This is an economic disaster, says @TorstenBell
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The announced changes to disability benefits will lead to very substantial falls in income for some families. While some families will gain a small amount from the changes, others will lose thousands of pounds a year.
Chart showing Annual impact of changes to PIP and Universal Credit, by family characteristics: UK, 2029-30 Losses will fall on those who no longer qualify for PIP daily living, who will be £3,700 worse off in 2029-30 (in 2024-25 prices) if they are receiving the standard rate or £5,700 worse off if they receive the enhanced rate; those who lose Carer’s Allowance because someone they care for no longer qualifies for PIP, who will be £4,300 worse off; and those who claim UC after April 2026 and receive the new lower UC-H rate, who will lose £2,400. Current recipients of UC-H will have that element frozen from 2026, meaning they will lose £210 by 2029-30. The biggest losses could hit couples with a disabled member and somebody who cares for them full-time.

ALT Chart showing Annual impact of changes to PIP and Universal Credit, by family characteristics: UK, 2029-30 Losses will fall on those who no longer qualify for PIP daily living, who will be £3,700 worse off in 2029-30 (in 2024-25 prices) if they are receiving the standard rate or £5,700 worse off if they receive the enhanced rate; those who lose Carer’s Allowance because someone they care for no longer qualifies for PIP, who will be £4,300 worse off; and those who claim UC after April 2026 and receive the new lower UC-H rate, who will lose £2,400. Current recipients of UC-H will have that element frozen from 2026, meaning they will lose £210 by 2029-30. The biggest losses could hit couples with a disabled member and somebody who cares for them full-time.

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If wages had continued to grow as they were before the financial crash of 2008, real average weekly earnings would be around £11,000 per year higher than they are now: new RF analysis sheds light on what 15 years of economic stagnation have done to our pay and living standards.
Average weekly earnings (regular pay), adjusted for CPIH inflation, compared to pre-financial crisis trend: GB

ALT Average weekly earnings (regular pay), adjusted for CPIH inflation, compared to pre-financial crisis trend: GB

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If our wages had continued growing after 2008 the same way they had been before, we would be on average *£14,000* better off. Instead, real average wages are only set to regain their 2008 levels in two years time - after nearly two decades of lost pay growth.
Chart showing Real average weekly earnings, outturn, successive OBR forecasts, and extrapolation of pre-recession trend: GB/UK

ALT Chart showing Real average weekly earnings, outturn, successive OBR forecasts, and extrapolation of pre-recession trend: GB/UK

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Kicking off our first session - stagnation nation - @GregoryThwaites shows how Britain has fallen behind its competitor countries over the past 15 years. Prolonged poor economic performance has consequences...
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Higher incomes matter for well-being, but they have diminishing returns. An extra £1,000 of income delivers a far greater well-being boost to a household with £10,000, compared to one with £100,000. resolutionfoundation.org/pub…
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The Government’s new Health and Disability Green Paper will deliver tiny income gains for up to four million households, at a cost of major income losses for those who are too ill to work or no longer qualify for disability benefit support. 🧵⤵️
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"The tax system gets worse and worse over time." @DanNeidle makes the case for big-picture tax reform.
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The wage stagnation of the past decade and a half years is almost completely unprecedented: New RF data sheds light on what 15 years of economic stagnation have done to our pay and living standards.
Torsten Bell, Chief Executive at the Resolution Foundation said: "The wage stagnation of the past decade and a half is almost completely unprecedented. Nobody who’s alive and working in the British economy today has ever seen anything like this, and the toxic combination of low growth and high inequality has left poorer households particularly exposed." This is definitely not what normal looks like. This is what failure looks like, and we urgently need an economic strategy to turn this state of affairs around.

ALT Torsten Bell, Chief Executive at the Resolution Foundation said: "The wage stagnation of the past decade and a half is almost completely unprecedented. Nobody who’s alive and working in the British economy today has ever seen anything like this, and the toxic combination of low growth and high inequality has left poorer households particularly exposed." This is definitely not what normal looks like. This is what failure looks like, and we urgently need an economic strategy to turn this state of affairs around.

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Almost two-thirds of the personal tax cut gains go to the richest fifth of households, who will be better-off on average by £3,090 next year. Strikingly, almost half will go to the richest 5 per cent, while the poorest half of households will gain just £230 on average next year.
Impact of tax and benefit policies announced in September 2022 by equivalised household income vigintile, after housing costs, in 2022-23 prices: UK, 2023-24

ALT Impact of tax and benefit policies announced in September 2022 by equivalised household income vigintile, after housing costs, in 2022-23 prices: UK, 2023-24

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2024 will see some easing of cost pressures. But British households are on course to be £1,200 poorer on average going into the next election than they were coming out of the last one. That is something never seen before in modern British history. resolutionfoundation.org/pub…
Chart showing real median/mean household disposable income: GB/UK

ALT Chart showing real median/mean household disposable income: GB/UK

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From our new report - the full effect of the TCA will take years to be felt. Labour productivity will be reduced by 1.3% 2030. Real pay is set to be £470 per worker lower each year, on average. beenhttps://www.resolutionfoundation.org/publications/the-big-brexit/
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NEW Chart of the Week from RF. If the Government uprates benefits by earnings rather than prices in April 2023, here's the overall impact of tax and benefit policies taking effect next year: - Richest 5% get a 5.5% (£9,200) income boost - Poorest 20% take a 2% (£300) income hit
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Britain has seen an acute living standards slowdown over the past 20 years, affecting everyone. A typical family today would be £20,000 richer had incomes continued at the rate of growth trending in 2005, when the Foundation was founded. Read more: buff.ly/NuhNFF9
Chart showing average annual non-pensioner real household income growth, by income percentile: GB/UK

ALT Chart showing average annual non-pensioner real household income growth, by income percentile: GB/UK

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The poorest households in Britain spend almost three times as much of their income on fuel bills as the richest ten per cent. They are more exposed to both the rise in energy bills - and fall in Universal Credit - coming this October.
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Lastly, it's worth noting how the number of people out of work due to long-term sickness continues to rise, reaching a fresh record high of 2.55 million. Tackling this issue will hold the key to further boosting the size of Britain’s workforce.
Change in economic inactivity among 16-64 year olds since January 2020 by main reason: UK

ALT Change in economic inactivity among 16-64 year olds since January 2020 by main reason: UK

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Yesterday, @TorstenBell asked former First Minister of 🏴󠁧󠁢󠁷󠁬󠁳󠁿Wales🏴󠁧󠁢󠁷󠁬󠁳󠁿 @MarkDrakeford where he thought the UK might be in ten years time. Catch up on our devolution conference here ⤵️ resolutionfoundation.org/eve…
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From our new report - the North East is expected to be hit hardest by Brexit as its firms are particularly reliant on exports to the EU. London, Scotland and Northern Ireland* are expected to outperform rest of UK. * based on current TCA/NI protocol resolutionfoundation.org/pub…
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Five poorly-justified tax reliefs, used by just 70,000 individuals, are costing other taxpayers £4 billion a year, according to new HMRC tax reliefs statistics - and should be in the sights of the Chancellor as he approaches his March Budget: resolutionfoundation.org/com…

Five bad ways to hand out £4 billion a year • Resolution Foundation

Taxes are going up, in large part due to big policy choices like the upcoming rise in the Corporation Tax rate and the prolonged freezing of various tax thresholds. Yet it’s always possible that...

resolutionfoundation.org
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Rather than make rushed cuts to welfare spending, there are plausible options to raise tax even with major tax increases off the table. A 2-year freeze extension to Income Tax and National Insurance thresholds would be broadly progressive – except for the highest-income households – & raise around £8bn.
chart showing Impact of a two-year freeze to Income Tax and National Insurance thresholds: UK, 2029-30. Threshold freezes in 2028-29 and 2029-30 would not have an immediate impact on households Employee impacts in 2029-30:Basic rate: -£150 Higher rate: -£450 Additional rate payer: -£350 (Less for UC households).

ALT chart showing Impact of a two-year freeze to Income Tax and National Insurance thresholds: UK, 2029-30. Threshold freezes in 2028-29 and 2029-30 would not have an immediate impact on households Employee impacts in 2029-30:Basic rate: -£150 Higher rate: -£450 Additional rate payer: -£350 (Less for UC households).

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The Health and Disability Green paper will deliver tiny income gains at the cost of major losses for those with health problems or a disability. Plans to save £5 billion by restricting PIP qualification would mean between 800,000 & 1.2 million people losing support of between £4,200 & £6,300 per year by 2029-30.
Quote: Louise Murphy, Senior Economist at the Resolution Foundation, said: “The package of measures announced in today’s Green Paper should encourage more people into work. But any living standards gains risk being completely over-shadowed by the scale of income losses faced by those who will receive reduced or no support at all – irrespective of whether they’re able to work. Around one million people are potentially at risk of losing support from tighter restrictions on PIP, while young people and those who fall ill in the future will lose support from a huge scaling back of incapacity benefits. The irony of this Health and Disability Green Paper is that the main beneficiaries are those without health problems or a disability. And while it includes some sensible reforms, too many of the proposals have been driven by the need for short-term savings to meet fiscal rules, rather than long-term reform. The result risks being a major income shock for millions of low-income households.”

ALT Quote: Louise Murphy, Senior Economist at the Resolution Foundation, said: “The package of measures announced in today’s Green Paper should encourage more people into work. But any living standards gains risk being completely over-shadowed by the scale of income losses faced by those who will receive reduced or no support at all – irrespective of whether they’re able to work. Around one million people are potentially at risk of losing support from tighter restrictions on PIP, while young people and those who fall ill in the future will lose support from a huge scaling back of incapacity benefits. The irony of this Health and Disability Green Paper is that the main beneficiaries are those without health problems or a disability. And while it includes some sensible reforms, too many of the proposals have been driven by the need for short-term savings to meet fiscal rules, rather than long-term reform. The result risks being a major income shock for millions of low-income households.”

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The changes to disability benefits will lead to very substantial falls in income for some families. While some families will gain a small amount from the changes, others will lose thousands of pounds a year.
Chart showing Annual impact of changes to PIP and Universal Credit, by family characteristics: UK, 2029-30

ALT Chart showing Annual impact of changes to PIP and Universal Credit, by family characteristics: UK, 2029-30

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Today the Chancellor announced the largest tax cuts in 50 years – the largest in a single fiscal event since Anthony Barber’s ill-fated 1972 Budget – driving a £411 billion borrowing surge that will break all fiscal rules - THREAD 🧵
Net long-term annual impact of tax policy announcements at each fiscal event, 2026-27 nominal GDP terms: UK

ALT Net long-term annual impact of tax policy announcements at each fiscal event, 2026-27 nominal GDP terms: UK

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NEW #SpringStatement2022 analysis - Typical household incomes are forecast to fall by 2% across the parliament as a whole (2019-20 to 2024-25), making this parliament the worst on record for living standards, beating the 1% cent income fall over the 2005-05 to 2010-11 parliament.
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The Chancellor is reportedly considering bringing forward the Conservative manifesto commitment to raise the main income tax thresholds to £12,500 and £50,000 next year. This would cost around £3.7bn, and overwhelmingly benefit the richest tenth of households
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The big picture has not changed with this Budget, says RF's @TorstenBell. Britain remains a country where taxes are heading up not down and where incomes are set to remain below their level at the last general election when voters return to the polls.
Quote from RF Chief Executive Torsten Bell: The Chancellor has delivered a second dollop of pre-election tax cuts, borrowing more and taxing the likes of non doms, vapes and energy companies to do so. When combined with big previously announced tax rises, this leaves a complex pattern of winners and losers. Middle earners make up the bulk of the former, while low or high earners will still see their taxes rise. The biggest choice Jeremy Hunt made was to cut taxes for younger workers, while allowing taxes to rise for eight million pensioners. This is a staggering reversal of the approach taken by Conservative governments since 2010. It is undoubtedly good economics, even if the politics are a harder sell."

ALT Quote from RF Chief Executive Torsten Bell: The Chancellor has delivered a second dollop of pre-election tax cuts, borrowing more and taxing the likes of non doms, vapes and energy companies to do so. When combined with big previously announced tax rises, this leaves a complex pattern of winners and losers. Middle earners make up the bulk of the former, while low or high earners will still see their taxes rise. The biggest choice Jeremy Hunt made was to cut taxes for younger workers, while allowing taxes to rise for eight million pensioners. This is a staggering reversal of the approach taken by Conservative governments since 2010. It is undoubtedly good economics, even if the politics are a harder sell."

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In 2024, the UK had the lowest taxes on an average employee of any G7 country. UK taxes for lower earners were also the lowest in the G7. But the UK's position might change in 2025. Read more 👉 buff.ly/4ppe7Q8
Chart showing tax wedge for a single employee on that country's average pay: OECD, 2024 In OECD comparisons, which look at the equivalents of Income Tax and employee NI paid by a full-time employee on mean pay (around £50,000 in the UK), our effective tax rate was the lowest in the G7 last year, with the UK on 21 per cent – compared to 24 per cent in the US and 37 per cent in Germany. But this is not a complete measure: if we add in employer NI, then the total tax wedge for this employee rises to 29 per cent (as a share of total labour cost). But this was, again, the lowest in the G7, and among the lowest in the OECD, as Figure 1 shows, with an OECD average of 35 per cent.

ALT Chart showing tax wedge for a single employee on that country's average pay: OECD, 2024 In OECD comparisons, which look at the equivalents of Income Tax and employee NI paid by a full-time employee on mean pay (around £50,000 in the UK), our effective tax rate was the lowest in the G7 last year, with the UK on 21 per cent – compared to 24 per cent in the US and 37 per cent in Germany. But this is not a complete measure: if we add in employer NI, then the total tax wedge for this employee rises to 29 per cent (as a share of total labour cost). But this was, again, the lowest in the G7, and among the lowest in the OECD, as Figure 1 shows, with an OECD average of 35 per cent.

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From our new report - 86% above inflation house price growth over the past 20 years has delivered capital gains on home owners' main residences worth £3 trillion. But this Great British wealth windfall is unequal, unearned and untaxed. resolutionfoundation.org/pub…
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If our wages had grown since 2008 the same way they had been before, we would be on average *£14,000* better off. Instead, real average wages will only regain their 2008 levels in 2026 - nearly two decades of lost pay growth. Full budget analysis 👉 resolutionfoundation.org/pub…
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More than two-thirds of the confirmed welfare cuts will fall on the poorest half of the country. The biggest cut is raising the eligibility threshold for PIP, a benefit not related to work status, saving £4.5 billion. 800,000 stand to lose up to £6,300.
Chart showing estimated annual impact of the confirmed changed to PIP and UC by income vigintile

ALT Chart showing estimated annual impact of the confirmed changed to PIP and UC by income vigintile

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Are people in the UK 'over-taxed'? @DanNeidle points out that the median worker is currently paying historically low levels of tax 👇
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As we enter 2024, the average annual food bill is £1,000, and the average energy bill £760, higher than they were pre-pandemic. The cost of living crisis has affected us all – but poorer households, who spend a greater share of budgets on essentials, have been hit hardest.
Chart showing average increase in annual household consumption on food and energy since 2019-20 at prices in each quarter: UK

ALT Chart showing average increase in annual household consumption on food and energy since 2019-20 at prices in each quarter: UK

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Living in lockdown - 16 per cent of families in London live in overcrowded accommodation. That's almost three times as much as any other region or nation across the UK - though overcrowding still a big issue in other cities within regions, such as Birmingham.
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🚘 The UK is in the slow lane 🚘 This morning's disappointing GDP data, follows on from productivity which has been flatlining since 2008. Productivity stagnation = wage stagnation. Av. wages are £14,400 below pre-financial crisis trend ⤵️ resolutionfoundation.org/pub…
Chart showing Indices of real annual wages (actual and pre-recession trend) and real output per hour worked (2000 = 100): GB/UK

ALT Chart showing Indices of real annual wages (actual and pre-recession trend) and real output per hour worked (2000 = 100): GB/UK

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Budget day was a big day in Westminster, with middle earners winning from the tax cuts, while others (notably lower earners and pensioners) lost out. But – as @TorstenBell explains – overall not much has changed for Britain, a country where taxes are going up, not down.
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The UK is one of just six OECD economies – alongside Latvia, Iceland, Chile, Colombia and South Africa – that still hasn't returned to pre-pandemic employment rates. And our aging and ailing workforce won’t make that return easy.
Chart showing 16-64 employment rate, outturn scenarios: UK

ALT Chart showing 16-64 employment rate, outturn scenarios: UK

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Without further significant interventions from Government, household incomes are on course to fall by 5% this year, and by 6% next year. This stark two year income fall – equivalent to £3,000 for the typical household – would be the deepest living standards squeeze in a century.
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Should benefits be cut? Well, they already have been. A lot. Benefits not keeping pace with inflation (plus other cuts) since 2010 means the poorest fifth will be around £2,700 a year worse off *already*. Chart by @LalithaTry ⤵️
Chart showing impact of benefit policy changes

ALT Chart showing impact of benefit policy changes

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Our new report shows that Britain’s lowest-paid employees are paying the heaviest economic price in the coronavirus crisis: 30 per cent of Britain’s lowest-paid employees have either been furloughed or lost their jobs altogether: resolutionfoundation.org/pub…

The effects of the coronavirus crisis on workers • Resolution Foundation

The coronavirus crisis has hit workers hard: the numbers of those furloughed and those newly claiming Universal Credit illustrates the scale. To date, however, we have had very limited information...

resolutionfoundation.org
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The poorest families in Britain - who have been hit hardest by the Covid crisis - will overwhelmingly bear the burden of the £20 a week cut to Universal Credit this October (ie at a time when unemployment is expected to rise). Around six million families in total will lose out.
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Replying to @resfoundation @paullewismoney @Jeremy_Hunt
At our event @jackhleslie says that the main place people found out about Help to Save was @MartinSLewis website. It's a great website, well done Martin, but a damning indictment of government efforts to promote the scheme, or indeed jobcentres administering Universal Credit.
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We need to reform our planning system - the UK has seen no increase in the amount of built-up land it has per person since 1990, in stark contrast to the growth seen across all other G7 countries.
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Low-paid workers are at the epicentre of the economic crisis. They work in sectors most affected by social distancing measures, working from home is a less viable option, and they have fewer savings to fall back on if they lose jobs. They must be front and centre of govt support.
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📢 NEW research! The minimum wage is the single most successful economic policy in a generation. Since it was introduced in 1999, it's boosted the wages of millions of Britain’s lowest earners by £6,000 a year. Read now ⤵️ resolutionfoundation.org/pub…
Chart showing change in real median hourly pay since 1998: UK

ALT Chart showing change in real median hourly pay since 1998: UK

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The UK’s average GDP growth has been flattered by a booming population, which has grown by the equivalent of six million more people since 2010. This is the fastest population growth the UK has seen for a century, with three-quarters accounted for by migration.
Chart showing indices of real GDP, GDP per capita and GDP per hour worked (2010=100): G7

ALT Chart showing indices of real GDP, GDP per capita and GDP per hour worked (2010=100): G7

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The incomes of the poorest families in Britain - who have been hit hardest by the Covid crisis - will be cut by five per cent overnight after planned £20 a week cut to Universal Credit goes ahead this October. This is a bad decision - being made at a bad time. Here's why (THREAD)
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Britain's unprecedented post-crash pay squeeze - the 2010s is on course to be worse decade for pay growth in over 200 years
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The Government's decision to leave the two-child limit in place at the Budget will have a material impact, as the policy affects an increasing number of children as time goes on, We estimate that an additional 63,000 children will become affected by the policy between now and April 2025.
Chart showing Estimated number of families and children affected by the two-child limit: GB

ALT Chart showing Estimated number of families and children affected by the two-child limit: GB

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Switching 2p from National Insurance to Income Tax could raise £6 billion while protecting workers’ pay packets. Here's what you need to know 👇 👇 👇
1. time for a rethink A gloomy economic outlook is making it more likely that the Chancellor will need to increase taxes at the Autumn Budget. She should take this opportunity to protect workers' pay packets, pay packets, at the same time as brining in revenue and making the tax system fairer.

ALT 1. time for a rethink A gloomy economic outlook is making it more likely that the Chancellor will need to increase taxes at the Autumn Budget. She should take this opportunity to protect workers' pay packets, pay packets, at the same time as brining in revenue and making the tax system fairer.

2. fairer share Currently, earnings from employment are taxed twice - in the form of National Insurance Contributions (NICS) and Income Tax. Other forms of income, like the income landlords earn from rent, only face Income Tax. Cutting NICs by 2p while increasing income tax by the same amount would have no impact on most employees.

ALT 2. fairer share Currently, earnings from employment are taxed twice - in the form of National Insurance Contributions (NICS) and Income Tax. Other forms of income, like the income landlords earn from rent, only face Income Tax. Cutting NICs by 2p while increasing income tax by the same amount would have no impact on most employees.

3. A helping hand Under this proposal, a pensioner with an income of £25,000 would pay around £250 a year more in Income Tax. The New State Pension will be rising by over £500 next April. For pensioners with both incomes below £40,000, that boost would be bigger than the tax rise, so they would still be better off next year than this.

ALT 3. A helping hand Under this proposal, a pensioner with an income of £25,000 would pay around £250 a year more in Income Tax. The New State Pension will be rising by over £500 next April. For pensioners with both incomes below £40,000, that boost would be bigger than the tax rise, so they would still be better off next year than this.

4. Delivering fairness and fiscal stability The policy would raise £6 billion a year while protecting the payslips of 30 million employees. This is a change for the Chancellor to provide fiscal reassurance alongside long-lasting beneficial tax reform.

ALT 4. Delivering fairness and fiscal stability The policy would raise £6 billion a year while protecting the payslips of 30 million employees. This is a change for the Chancellor to provide fiscal reassurance alongside long-lasting beneficial tax reform.

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2024 will be messy for politics and for living standards. 🧵 Inflation falling back faster than expected means many will benefit from rising real wages. But as we enter 2024 the average annual food bill remains £1,000 & the average energy bill £760, higher than they were pre-pandemic.
Average increase in annual household consumption on food and energy since 2019-20 at prices in each quarter: UK

ALT Average increase in annual household consumption on food and energy since 2019-20 at prices in each quarter: UK

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Catch up on @campbellclaret and @RoryStewartUK discussing our report #EndingStagnation on the @RestIsPolitics this week. Listen to the full episode wherever you get your podcasts 🎧 linktr.ee/restispolitics
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80% of the tax cuts coming into force this Thursday go to better-off households. 67% of benefit cuts fall on poorest third of households
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MUST READ: Stagnation nation: navigating a route to a fairer and more prosperous Britain. This is the Interim Report of the Economy 2030 Inquiry - a @resfoundation / @CEP_LSE colloboration, funded by @NuffieldFound economy2030.resolutionfounda…
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This parliamentary term is on track to be by far the worst for living standards since the 1950s. Typical working age household incomes are on course to be 4% lower in 2024-25 than they were in 2019-20. Never in living memory have families got so much poorer over a parliament.
Graph showing Total real growth in non-pensioner equivalised household disposable income, after housing costs, by parliament: GB/UK

ALT Graph showing Total real growth in non-pensioner equivalised household disposable income, after housing costs, by parliament: GB/UK

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Universal Credit claimants take home as little as £2.24 for every extra hour worked – highlighting how hard it is to work their way out of a huge living standards loss this Autumn - our quickfire take on today's row over the coming £20 a week cut to UC. resolutionfoundation.org/pre…
Fact check: A Universal Credit claimant earning the National Living Wage – currently £8.91 an hour – would not take home an extra £20 a week for two hours work. Instead, they would take home just £6.60, falling to £4.50 if they pay tax and National Insurance.

ALT Fact check: A Universal Credit claimant earning the National Living Wage – currently £8.91 an hour – would not take home an extra £20 a week for two hours work. Instead, they would take home just £6.60, falling to £4.50 if they pay tax and National Insurance.

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Cutting National Insurance would be a poor way to support households with energy bills, doing nothing for those aged over 66, and those who earn too little to pay NI. 85 per cent of the gains would go to the richer half of households.
Impact on average disposable household incomes (after housing costs) of cancelling the personal National Insurance rate rise, by income vigintile, 2023-24: UK

ALT Impact on average disposable household incomes (after housing costs) of cancelling the personal National Insurance rate rise, by income vigintile, 2023-24: UK

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There are rumours that the Government is considering means-testing PIP. But this would affect claimants from across the income distribution, contradicting PIP's policy objective of not relating the extra costs of disability to household income.
chart showing Estimated number of adults who receive PIP but do not receive, or are not entitled to, means-tested benefits: UK, 2026-27

ALT chart showing Estimated number of adults who receive PIP but do not receive, or are not entitled to, means-tested benefits: UK, 2026-27

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Britain on course for unprecedented fall in incomes for poorest half of households over the parliament resolutionfoundation.org/pub…
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The Chancellor did not need to concentrate so much of her fiscal consolidation on welfare. Extending the freeze in personal tax thresholds by just a single year would have saved almost as much (£3.9 billion in 2029-30) and would have been shared across 24 million households.
Chart showing Impact of a one-year freeze to Income Tax and National Insurance thresholds: UK, 2029-30

ALT Chart showing Impact of a one-year freeze to Income Tax and National Insurance thresholds: UK, 2029-30

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While there is a lot of controversy about the drop in furloughing support from 80% (the blue line) to 67% (the green line), the far bigger drop from a living standards perspective is for those not entitled to new support, and face far less support on Universal Credit (red line)
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These tax cuts largely reverse rises in recent years, but the 4-year freeze to income tax thresholds remains. The scale of that freeze means the majority of earners will still see their taxes increased when all tax changes announced during this parliament are taken into account.
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Britain is an international laggard when it comes to public investment – consistently among the weakest third of OECD countries. Had the UK’s levels been at the OECD average over the past two decades, public investment would have been a truly transformational £500 billion higher
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Our #SpringStatement2022 analysis shows typical household incomes are forecast to fall by 2% across the parliament as a whole (2019-20 to 2024-25), making this parliament the worst on record for living standards: resolutionfoundation.org/pub…
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