Over the last decade, we had become accustomed to low inflation and ultra-low interest rates as well as stable food and energy prices.  The significant change this year of all of these is unsettling and is straining household budgets.  The response from the Conservative Government has been unprecedented and builds upon previous measures to support households, especially those on lower and middle incomes.  

Back in 2010 when the Conservatives entered government, the income tax allowance was only £6,475 a year, with everything earned over that being taxed.  This had only risen by £2,430 during the 13 years of the previous Labour Government.  Since 2010, this was progressively raised each year at rates much greater than inflation.  The tax-free allowance has almost doubled since the Conservatives entered government, with it now being £12,570, having risen by nearly £6,100.  This is significant because it has been low and middle-income earners who proportionally have benefited the most from this and continue to do so.

In July, we saw a major increase of the annual National Insurance threshold from £9,880 to £12,570.  This now matched the tax-free allowance and again proportionately helps lower and middle earners to a greater extent.  These previous changes should be taken in account when evaluating the across-the-board tax cuts in last week’s mini budget that will help grow our economy.

All workers (and businesses) are going to benefit from the 1.25% reduction in the national insurance rate that comes into effect in November.  In April, there will also be a 1% reduction in income tax for everyone.  These measures will put money back in people’s pockets and support our economy, which along with the rest of the world, is facing major inflationary challenges following Covid-19 and Russia’s illegal war against Ukraine.

The Conservative’s support to cover high energy costs for both households and businesses is very welcome.  We shouldn’t forget that the least well-off will be receiving additional payments of up to £1,200 to help cover energy bills, with every household receiving £400.  This is in additional to the energy price cap freezing bills for the next two years.            

Councillor Duncan Crow, Leader of Crawley Borough Council Conservative Group

28th September 2022