A potential backlash against Andy Burnham is taking shape in London, with almost two-thirds of the capital’s residents fearing that the new Government’s policies could leave their households worse off, according to research from Novuna Personal Finance.
The warning comes despite Londoners remaining more confident about their own finances than consumers elsewhere in the UK.
Novuna’s latest Consumer Confidence Tracker found that 64 per cent of Londoners believe recent Government policies could damage their household finances.
Yet only one in five, or 20 per cent, expects their personal financial position to deteriorate over the next three months.
Almost a third, meanwhile, believe the Government can deliver its agenda without increasing the amount they personally pay in tax. Theresa Lindsay, chief marketing officer at Novuna, said the Prime Minister’s focus on the North risked intensifying concerns in the capital.
“With Burnham’s focus on the North, there is understandable concern that growth in London could fall down the agenda – particularly as recent figures show the capital has the highest unemployment rate in the country,” she said.
“However, Londoners remain relatively optimistic that their personal taxes will not rise under the new Prime Minister’s policy agenda. That is notable at a time when many households are still feeling financial pressure and are cutting back on everyday discretionary spending.”
Londoners draw a line under higher taxes
The research points to a pronounced reluctance among Londoners to pay more to finance the Government’s priorities.
More than a third, 35 per cent, said they would refuse to pay any additional income tax each month, while a further 18 per cent would accept an increase of less than £10. Just 8 per cent backed raising taxes on most households as the preferred way of financing Government policies.
Instead, 16 per cent wanted policies delayed or scaled back, while 15 per cent favoured cutting spending elsewhere in public services. The findings suggest that any attempt to raise additional revenue could face a particularly difficult reception in the capital, where household finances are already being squeezed by high living costs.
Spending cuts deepen
Londoners are already responding to the pressure by tightening their belts.
Four in ten, or 40 per cent, said they had reduced spending on non-essential purchases during the previous three months, up from 33 per cent in April. The retrenchment is particularly visible in socialising and eating out, with 35 per cent reporting lower spending in those areas compared with 29 per cent in April. The proportion planning to tightly control discretionary spending over the next three months has also risen sharply, reaching 35 per cent from 26 per cent in April.
Food remains the biggest pressure on household budgets, while a quarter of Londoners said they had cut back on travel and holiday plans this summer. The figures paint a mixed picture for the new Government: Londoners remain comparatively confident about their own finances, but that resilience is being accompanied by growing caution over spending and a firm resistance to higher taxation.
For Burnham, the political risk is that optimism over personal finances could prove fragile if households conclude that the Government’s agenda is being paid for from their pockets.
Leave a Comment