Tax bills for households will be £3,000 higher since Boris Johnson became Prime Minister as a result of changes announced in the Budget, according to a leading think tank.
The Resolution Foundation also said the poorest fifth in the country will be around £280 a year worse off as a result of the £20 cut to Universal Credit.
Researchers at the left-leaning think tank said three-quarters of households on UC will be worse off as a result of the changes, even with new tapering rules and a rise announced by Chancellor Rishi Sunak.
The foundation said the chancellor set the stage for a new high tax economy rather than the high wage economy pledged by the Prime Minister, or the low tax one favoured by many Conservative MPs
Despite the rosier outlook for public finances family budgets will take a knock said the think tank, with household incomes set to stagnate as a result of rising inflation.
Wages are also unlikely to rise in real terms this year due to high inflation and will only increase by around 2.4 per cent between the financial crisis in 2008 and 2024, compared to a one third rise recorded in the 16 years prior to 2008.
The calculation of taxes increasing by £3,000 by 2026/27 means the tax take will be at the highest level since 1950, the RF found.
James Smith, research director at the RF, said: “We’re becoming a bigger state and more higher tax state.
“The total increases in taxes since Boris Johnson has become Prime Minister is equivalent to around £3,000 for each household in the UK, so this is a really chunky change, although most of that falls on people on higher and middle incomes.”
The foundation said that Tory austerity had only been partially reversed by higher spending.
Only a third of the cuts to real day-to-day spending per-capita in unprotected Whitehall departments since 2009-10 will have been reversed by the middle of the decade
Real day-to-day spending in Work and Pensions will be down 40 per cent on 2010 levels when the Tories came to power.
Torsten Bell, Chief Executive of the Resolution Foundation, said: “While tax revenues and NHS spending will be growing rapidly in this economy, growth in pay packets and family incomes looks far more anaemic – a huge challenge that the welcome rise in the National Living Wage and boost to Universal Credit eased, but did not overcome.
“With Britain still getting to grips with the impact of Covid, Brexit and the Net Zero transition over the coming decade, the country remains in need of an economic strategy that steers us through this period of huge economic change while addressing long standing challenges of low productivity and high inequality.”
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