Tax cuts welcomed by DUP - but Wilson slams lack of action on nursery costs and ongoing black hole in Northern Ireland budget

Former Northern Ireland finance minister Sammy Wilson has lamented that nothing has been done to curb the “hefty” price of childcare, and that the Province’s budget continues to have a huge hole in it.
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He was reacting to Jeremy Hunt’s latest changes to tax and spending in the UK, which the Tory chancellor hailed as the “biggest tax cut on work since the 1980s”.

Arguably the biggest change announced was to the amount of National Insurance contributions people will pay, which Mr Hunt said will leave most workers hundreds of pounds better off.

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Mr Wilson, who was in charge of Northern Ireland’s finances from 2009 to 2013, said this was a welcome move – as were moves to get people into work, the renewal of the “triple lock” on pensions, and a tax-free scheme for companies buying machinery.

Sammy Wilson pictured today in the CommonsSammy Wilson pictured today in the Commons
Sammy Wilson pictured today in the Commons

But overall he dubbed the autumn statement a collection of “missed opportunities to demonstrate that work pays”.

"The cut in NICs is a step in the right direction, but well short of the tax game-changer that working families need and deserve,” he said, adding that the general tax burden upon workers remains “amongst the highest... in living history”.

“Whilst a police officer, nurse or teacher earning £35,000 per year may be £450 better off, there was no action to reduce the £1,300 per month childcare bill they have due to their decision to work.

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"It is simply not sustainable to expect workers to slog long hours on their feet and have their pay swallowed up almost entirely by tax and a hefty childcare bill.”

Right now, the government pays up to 20% of people’s childcare bills. Mr Wilson and others had wanted this percentage raised.

When it comes to Northern Ireland specifically, a DUP source said that they expect a possible cash injection into the Province’s public coffers of roughly £110m as a result of the autumn statement.

However, Northern Ireland has already racked up a £297m overspend in 2022/23, and is on course to overspend during the 2023/24 financial year, too.

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The source indicated that an additional £75m which would otherwise have been added to that £110m will instead be spent just paying off this pre-existing debt.

Mr Wilson said: “This vicious circle of overspending can only be broken through a fundamental reform of how public services in Northern Ireland are funded.

"Currently they are funded below the government’s own definition of objective need and the situation is set to worsen in future years. This must be changed.

"There is a solution on the shelf which was used in Wales. It must now be used for Northern Ireland.”

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This is a reference to what’s often called a “fiscal floor” or “funding floor”.

It is basically like a kind of guarantee that funding will keep up with the level of need.

It means that, ever since 2015, for every £100 spent in England per capita each year about £115 would be spent in Wales (though that figure sometimes varies).

​In terms of the direct impact of Wednesday’s statement on workers, there are three main ones.

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The first applies to the National Living Wage, the hourly rate paid to all those over the age of 23 (though from this coming April onwards, 21 year olds will get it too).

The chancellor told MPs this hourly rate will increase from £10.42 to £11.44 from April 2024 – "the largest ever cash increase".

When it comes to National Insurance for employees, this is deducted straight from workers’ paypackets before their wages hit their bank account.

For anybody earning between about £12,500 and £50,200, the amount of National Insurance deducted right now is 12%.

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This band takes in the vast majority of the workforce, with some exceptions (like under 21s, apprentices under 25, and workers over pension age).

The government says its cut from 12% to 10% will mean the average worker earning £35,400 a year shall see “an over £450 annual tax cut".

But although Mr Hunt promised the relief would be “immediate”, this change will not kick in until the New Year.

Meanwhile, National Insurance for self-employed people is dropping from 9% to 8%.

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But self-employed national insurance is more complicated: it only applies to profits which a self-employed worker earns between £12,570 and £50,270.

Cutting this rate from 9% to 8%, the chancellor says, means "saving the average self-employed person on £28,200 a year £350".

However, this will not kick in until April 2024.

All the main Northern Irish parties – except the UUP – had also reacted to the autumn statement at time of writing tonight, with the overwhelming response being negative.

Conor Murphy, who was the Province’s finance minister during 2020 to 2022, repeated the longstanding Sinn Fein mantra about “Tory cuts and austerity”.

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“Once again, the Tories have continued with their cruel agenda of austerity with more real term cuts to funding for public services and less money for pay,” he said.

“Savage Tory cuts continue to damage our economy.

“It’s unacceptable that our public services will not receive proper funding to tackle the ongoing crises in health, education and cost of living or fair pay for workers as a result of one party’s continued blockade of the Assembly.

“We urgently need a properly funded Executive restored now and parties working together to negotiate new financial arrangements for the north.”

Alliance deputy leader Stephen Farry said the chancellor’s announcement “does little specifically for Northern Ireland”.

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“The UK is continuing to suffer a huge cost of living crisis, around energy bills and other essentials,” he said.

"There is little new in this statement to help the most vulnerable households.

"The measures on benefits uprating and the pension triple lock are only confirmation of existing policies.”

This is a reference to the fact benefits are set to increase by just over 6%.

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“The cuts to business and personal taxes are welcome,” he added.

"However, there was scant attention to climate change.

"Once again the opportunity to launch a Green New Deal has been passed up."

SDLP leader Colum Eastwood meanwhile declared: “It’s hard to bear the whooping and hollering of Tory MPs as if they’ve delivered some magical cure to the challenges facing working people, when the truth is that the greatest source of financial stress and immediate pressure on households across our communities is 13 long years of Tory government.

“The best way that working people can change their circumstances is to get rid of this government.”