Reform UK’s tax plans disproportionately benefit high earners, analysis shows

Published

3 months ago

June 22, 2024

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Reform UK bills itself as the party “for the left behind” but its flagship tax policy disproportionately benefits those on higher incomes, analysis for Sky News shows.

Nigel Farage hailed the plan to raise the threshold at which workers start paying tax to from £12,571 to £20,000, saying it would lift millions of low-paid workers out of paying tax altogether.

However, Reform’s plan to raise the higher rate threshold from £50,271 to £70,000 would amount to a tax cut worth almost £6,000 for the top 10% of earners, vastly overshadowing the benefit to the lowest earners.

The top 10% of households, by disposable income, have £3,000 a month to spend after housing costs, council tax and direct taxes. A couple in this category would have £5,290 to spend.

These people would gain almost £5,983 in disposable income each year as a result of the changes.

The bottom 10% of households have less than £693 to spend on things such as heating and food each month. The figure rises to £1,195 for a couple. These households would gain an extra £221 per year.

Despite the vast discrepancy, Reform UK has repeatedly framed this as a policy for the lowest paid.

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At the party’s manifesto launch in South Wales, Mr Farage said: “I think the most innovative policy that we’ve put out in here is to raise the level at which people start paying tax to £20,000 a year.

“Why? Well, number one, it would take seven million people out of the tax system altogether, a devilishly complicated tax system. That would be a good thing, of course, for those on low pay.”

When challenged, Mr Farage maintained that people on lower incomes would benefit more than those on higher incomes when the tax cuts were viewed as a proportion of their total salary. However, that is not the case.

The changes would represent a 2.3% increase in disposable income for those in the bottom 10% and a 6.4% increase for those in the second highest group of earners.

It would cost the public purse about £59bn. The top 10% of households would receive 28p for every £1 spent, while the bottom 10% would receive just 2p.

Dr Jamie O’Hallaran, senior research fellow at IPPR, the left-wing thinktank that conducted the research, said: “These tax cuts would be both very costly and disproportionately benefit those on the highest incomes.

“At a time when public services and household finances are under such pressure, this would be highly irresponsible. Polls also show this is not what the public want.

“Voters are crying out for public services that work, not tax cuts for the top 10%.”

Politics

Lisa Nandy says Sir Keir Starmer ‘very sensible’ to accept football tickets worth thousands

Published

4 hours ago

September 21, 2024

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Lisa Nandy says Sir Keir Starmer 'very sensible' to accept football tickets worth thousands

Lisa Nandy has said Sir Keir Starmer’s decision to accept thousands of pounds worth of football tickets was “very sensible”.

The minister for culture, media and sport also said she had never accepted free clothes from a donor.

Speaking to Sky News at the start of the Labour Party conference today, the MP for Wigan said: “The problem that has arisen since [Sir Keir] became leader of the opposition and then prime minister is that for him to sit in the stands would require a huge security detail, would be disruptive for other people and it would cost the taxpayer a lot of money.

“So I think he’s taken a very sensible decision that’s not the right and appropriate thing to do, and it’s right to accept that he has to go and sit in a different area.

“But I know that he’d much rather be sitting in the stands cheering people on with the usual crowd that he’s been going to the football with for years.”

Ms Nandy also said while she has not accepted free clothes – joking “I think you can probably see that I choose my own clothes sadly” – she doesn’t “make any judgements about what other members of parliament do”.

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She said: “The only judgement I would make is if they’re breaking the rules, so they’re trying to hide what they’re doing. That’s when problems arise.

“Because the point of being open and transparent is that people can see where the relationships are, and they can then judge for themselves whether there’s been any undue influence.”

She asserted there had not been an undue influence in gifts accepted by senior Labour figures, adding: “We don’t want the news and the commentary to be dominated by conversations about clothes.

“We rightly have a system, I think, where the taxpayer doesn’t fund these things. We don’t claim on expenses for them. And so MPs will always take donations, will always take gifts in kind.

“MPs of all political parties have historically done that and that is the system that we have.”

She added: “I don’t think there’s any suggestion here that Keir Starmer has broken any rules. I don’t think there’s any suggestion that he’s done anything wrong.

“We expect our politicians to be well turned out, we expect them to be people who go out and represent us at different events and represent the country at different events and are clothed appropriately.

“But the point is that when we accept donations for that or for anything else, that we declare them and we’re open and transparent about them.”

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Sir Keir, Angela Rayner and Rachel Reeves said yesterday they will no longer accept donations in the future to pay for clothes.

The announcement followed criticism of Sir Keir’s gifts from donors, which included clothing worth £16,200 and multiple pairs of glasses worth £2,485, according to the MPs’ register of interests.

The register shows Ms Rayner has accepted clothing donations to the value of £2,230.

Sky News also revealed the scale of Sir Keir’s donations this week as part of our Westminster Accounts investigation.

Sir Keir was found to have received substantially more gifts and freebies than any other MP – his total in gifts, benefits, and hospitality topped £100,000 since December 2019.