Budget Representation to HM Treasury: Invest in the foundations of a healthy economy

Summary 

• The UK Women’s Budget Group (WBG) is a feminist think tank that provides evidence and capacity building on women’s economic position and that proposes policy alternatives for a gender-equal economy. We welcome this opportunity to submit a representation to HM Treasury on the Autumn Budget 2024 / Spending Review.
• Although inflation (CPI) has dropped to 2.2% in the year to July 2024 ¹ , austerity policies since 2010, followed by Covid and the cost-of-living crisis, have precipitated an unprecedented fall in living standards that requires urgent policy interventions. Falling inflation does not mean falling prices, but only that prices are rising more slowly. The costs of some key goods and services have gone up by more than inflation, including housing ² and childcare ³ . The cost-of-living crisis has put a strain on households’ ability to make ends meet, with women and those on low incomes disproportionately impacted. Combined with lower-than-inflation wage growth and weakened public services from over a decade of underfunding followed by a global pandemic, people’s living standards are continuing to fall.
• The impact of this is higher on those on low incomes who are more dependent on public services, spend a higher proportion of their income on essentials and have less savings, and on women as the “shock absorbers of poverty” within families.
• Taxes should be seen as a contribution to society and the common good, and a progressive and fair tax system is fundamental to building strong public services and a healthy and equal economy. Under-taxation of wealth reinforces gender disparities since women tend to have lower savings and wealth but rely disproportionately on the public goods that taxes help pay for. The tax system should be reformed by integrating taxation of capital gains and incomes from work into a single schedule with progressive bands, taxing wealth directly rather than just its transactions and transfers.
• We contend that public spending cuts in the name of fiscal responsibility are mistaken. Not only do they disproportionately affect those who can least afford it, they also have the opposite effect than intended by weakening the economy and worsening public finances. Good public services underpin a strong economy, and fixing the foundations of the economy must be by ensuring the needs of the most vulnerable are met.
• We urge the Government to abolish the two-child limit in line with their commitment to breaking down the barriers of opportunity for every child. Removing the two-child limit would be the most effective way to tackle child poverty, lifting 300,000 children out of poverty and reducing poverty for 700,000 children.
• Cuts to public services and social security have disproportionately impacted women especially poor, Black, Asian and Ethnic Minority women, single mothers and Disabled women across the UK, who cannot afford another period of austerity.
• We encourage a funding settlement for state departments and local government based on needs rather than a predetermined spending envelope. Our public services like health and care services need to be invested in to cope with demand, support gender equality and sustain a strong economy.
• Investment in infrastructure is vital to promote a healthy economy. This should include not only physical infrastructure but social infrastructure such as health, education and care services. These are as integral to the health and wellbeing of people and productivity of the economy. It is not just roads and rail that enable people to get to work and live fulfilling lives, but vital social infrastructure including early education and childcare and social care.
• Social infrastructure should also be expanded in response to the climate crisis in order to move the economy to an environmentally sustainable one. WBG analysis of ONS data on emissions found that the average job in health and care produces 26 times less greenhouse gas than a manufacturing job, over 200 times less than an agriculture jobs and nearly 1,500 times less than a job in oil and gas ⁴ . Moreover, demographic changes in the population are increasing the need for these services.
• Equality Impact Assessments are an integral way of evaluating policy for its impact on different groups of society, including women. They are the best tool to ensure compliance with the Public Sector Equality Duty that all public bodies, including the Treasury, are bound by. More information on Equality Impact Assessments is available in our briefing here. For more information on gender responsive budgeting please see our online resources.

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