Inside the seaside town where thousands face paying hundreds more in income tax ...Middle East

Beth a single parent, is feeling the pinch, with rent costing £1,200 per month and without wage growth keeping up.

“They’ll put minimum wage up, but that’s hand in hand with a tax rise,” the 45-year-old told The i Paper.

She said Bournemouth is full of people struggling to make ends meet, with “brokenness everywhere”.

The town ranks in the bottom 10 cities with the lowest wages in the UK, with an average salary of £31,000 per year – London ranks at the top with £49,000.

Beth, who works at a Christian centre, said house prices and rents just keep “going up and up and up”, outpricing people who are no longer able to live there.

“The wages don’t increase like the cost of housing,” she said, adding that the tiny two-bedroom maisonette that she shares with her son costs £1,200 a month.

This comes as the Treasury is set to rake in an extra £7bn per year in income tax than previously forecast, thanks to frozen thresholds and wage growth, new analysis shows.

The Office for Budget Responsibility (OBR) on Wednesday said income tax receipts – excluding self-assessments – were on track to hit £322bn by 2029-30, up from the £313.8bn previously forecast in October.

Fiscal drag

Freezing the value of tax thresholds combined with rising wages, means that more people will pay higher tax without the Treasury raising it directly. – this is know as fiscal drag.

According to the Institute of Fiscal Studies, only 3.5 per cent of adults in the UK paid the 40 per cent higher rate in 1991-92.

By 2022–23 11 per cent were paying higher rates, with that figure set to reach 14 per cent by 2027–28, the institute said in 2023.

As a result of the income tax threshold freeze, real household disposable income will be 1.4 per cent lower by 2027–28 than would have been the case if the personal allowance had been increased.

The institute said that an additional 2.5 million people would be dragged into the 40 per cent rate or higher by 2027/28.

The tax thresholds:

This would equate to an additional £6.9bn per year on average until the end of this Parliament.

Analysis shows that frozen tax bands and higher inflation will cost workers thousands in additional income tax over the next three years.

High earners on a £100,000 salary will pay £2,445 of extra tax each year until April 2028, compared to £2,317 under the previous forecast, according to calculations by investment platform, Interactive Investor.

Middle earners on £35,000 are set to pay £845 more, up from £801, while someone on a £20,000 salary would pay £282 in additional tax compared to £267 previously.

Rob, 51, also stressed people are struggling, with wage growth stalling and locals getting priced out of rentals.

“People have less money to go around so they’re struggling,” he said. “I’ve seen people bid for rents and being priced out. Those things are really difficult to see.”

He said he was in London recently and was shocked to see that the coffee prices were cheaper in the capital, where average wages are higher.

He said he has friends who live in Bournemouth but work in London, which allows them to afford the higher cost of living.

He claimed things have got “a lot worse” since Labour came to power, saying: “I’m so surprised. I was really shocked. I’m sad for those who voted Labour because a lot of them didn’t vote for the things that came about.”

Sue and Ian have retired in Bournemouth and said the city is filled with students and retirees. Working people struggle to afford housing in the city, Sue said.

Sue said her children cannot afford to buy a home in Bournemouth because house prices far outstrip wages, and mortgages are very high.

Ian said Bournemouth needs to decide what type of place it needs to be. It used to be a seaside town but since it became cheaper to holiday abroad in places like Spain, tourism has dried up and with it, the local economy has suffered.

He said Labour has broken a lot of their promises to voters, but the Conservatives also had their problems. “it’s the same deception and lies,” he said.

square PENSIONS

State pensioners to pay over £60 in income tax by 2027

Sue is a Waspi woman who believes Labour should agree to pay partial compensation for those affected. She had to delay her retirement due to changes in the retirement age.

Spencer Cartwright, 54, and James Critchley, 47, are retired and said they have not felt the impact of frozen income tax thresholds. They felt it was too early to judge Labour on its performance in government compared with the Tories.

Spencer said the Government needed to make cuts to become more efficient.

“Every government comes in and wants to be more efficient, and yes, it needs to be, because the way it’s grown is inefficient. It’s just the nature of the beast.”

He said he’s not worried about income tax because he’s retired and increasing defence spending was a priority due to historic underfunding by previous governments. “But taking that out of overseas aid was a bit of a sting,” he added.

Despite the backlash to some of the elements of the Spring Statement, the Chancellor has said her planning policies would boost economic growth despite a downgrade to this year’s GDP forecasts in light of global turbulence.

Rachel Reeves also restored £9.9bn of fiscal “headroom” – the difference between the amount the Treasury is borrowing and the maximum allowed under the rules .

The Chancellor said: “There are no quick fixes, no shortcuts to prosperity, but we have returned stability to our economy. We have brought back security for working people, and we are delivering national renewal.”

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