A Budget triple whammy of tax hikes, allowance freezes and pay changes means an NHS worker could be more than £300 worse off over the next two years, Labour has claimed.
Party analysis indicates that the cumulative effect of an immediate council tax rise, an effective pay cut and a looming freeze to income tax thresholds will leave a newly qualified nurse with £307 less in their pocket by 2023.
Labour has argued that the government’s pay recommendation for a one per cent pay rise for NHS workers in 2021/22 amounts to a “real terms cut” to wages given that the Office for Budget Responsibility is predicting consumer price inflation (CPI) will rise to 1.7 per cent in the coming year.
Shadow chancellor Anneliese Dodds accused her opposite number Rishi Sunak of “turning his back on our NHS heroes before the crisis is even over” with his Budget.
A newly-qualified nurse earning a £24,907 salary would face a real terms cut to the tune of £174 if the one per cent rise goes ahead, according to Labour.
And with the average Band D property likely to see a council tax rise of £93 this year and a lack of increase in personal allowance in 2022/23 meaning a nurse could pay £40 more tax, they could be £307 poorer over the course of the next two years, Labour suggested.
Dodds said: “The Budget has led to the absurd situation where a newly qualified nurse is over £300 worse off – while some large companies will be able to write off swimming pools as ‘super deductions’.
“The Conservatives’ approach weakened Britain’s foundations in the decade before the crisis and left us brutally exposed to the virus. Their decision to further squeeze families and cut public services won’t rebuild our country – it will just prolong the pain.”
Labour has previously called on ministers to hand over more cash to local authorities to avoid them putting up council tax bills next month.
But Dodds said the Tories were effectively “forcing through” council tax hikes while also pushing more people into the tax system over the coming years through the freeze on personal allowance incoming tax that was announced in the Budget.
The Office for Budget Responsibility said the personal allowance freeze, with the 2021-22 ceiling of £12,570 to be maintained for five years, will bring 1.3 million people into the tax system.
Dodds added: “We have said now is not the time for immediate tax rises, but the Tories are forcing through a council tax hike for families across the country. With the crisis still ongoing, that is economically illiterate.
“Then they want to squeeze family finances further still next April, a whole year before new corporation tax rises kick in.
“This shows the government has the wrong priorities- it should not be focusing on raising revenues from families so long before it turns to major businesses.”