Household costs hit private renters and families in Labour’s first year
Household costs rose higher for families and renters than other groups in the year to June, official data has shown, as inflation has nearly doubled in the first year of Labour compared to the last year of the previous Conservative government.
The Office for National Statistics (ONS) said overall UK household costs rose by 3.9 per cent in the year to June, which represents a surge from the 2.5 per cent level at the same time last year a month before the General Election.
Private renters saw costs rise by 4.5 per cent while bills for families increased by four per cent, pointing to the disproportionate effects of the UK economy on Brits.
The household costs index (HCI) inflation, which is an alternative quarterly measure for the cost of living as it considers the effects of mortgage interest rates and stamp duties, moves at a marginally higher level than consumer prices index (CPI) inflation.
In the month of June, CPI inflation was 3.6 per cent while more recent data for July has shown inflation hitting 3.6 per cent
Outright property owners experienced the lowest annual inflation in household costs of any group at 3.4 per cent in the year to June while retired households saw prices grow at a lower level than non-retired households.
Economists and the Bank of England and think tanks have pointed to the effects of higher employers’ national insurance contributions (NICs), which have forced firms to pass on tax costs onto consumers in order to main profitability, as a central factor for higher inflation in the last ten months of the Labour government.
Labour mulls adding costs to retired households
Chancellor Rachel Reeves is expected to raise more taxes at this year’s upcoming Budget due to expected downgrades to growth forecasts and higher debt interest payments eroding her fiscal buffer.
Treasury officials are considering increasing forms of wealth taxes, including charging national insurance on landlords’ rental income and adding a ‘mansion tax’ by ending the current exemption from capital gains taxes on primary residences when homes are sold for more than £1.5m.
Economists within the government and the Office for Budget Responsibility (OBR) will consider the costs of different tax hikes to the UK economy and how they may affect prices for different income groups ahead of the Budget.
Shadow Chancellor Mel Stride said that “ordinary working families” were being targeted under Labour despite manifesto pledges not to raise tax on “working people”.
“Labour’s tax on jobs and borrowing binge is pushing up prices and making everyday essentials more expensive,” Stride said.
“The Chancellor’s promise to drive up living standards simply isn’t working.”
Reeves is also bolstering her economics team and looking to recruit new economic advisers.
Pensions minister Torsten Bell, who was previously chief executive of the left-leaning economics think tank Resolution Foundation, is set to be given extra responsibility over Budget plans.
In his previous role, Bell called for tax hikes to make the UK “fairer”, proposing extra levies on home owners and pensioners.