Reform of Britain’s tax cut pledge raises doubts

Sunday, May 24, 2026 11:35 AM | Updated: Sunday, May 24, 2026 11:36 AM

Jenrick’s tax proposals have raised doubts. (Getty Images)

The UK reform’s pledge to cut taxes for workers who work overtime has faced criticism from economists across the political spectrum amid doubts that it will boost productivity.

The party said it would scrap income tax on workers earning less than £75,000 and working more than 40 hours a week, at a cost of around £5 billion per year, which it said would be funded by cuts to welfare payments.

Treasury spokesman Robert Jenrick said the legislation would save workers more than £13,000 a year in overtime, while Nigel Farage said it would “finally restore wages, boost productivity and make strong workplace cultures attractive once again.”

But economists have questioned the economic effectiveness of the proposal.

Julian Jessop, former chief economist at Capital Economics and research fellow at the Institute for Economic Research, said the policy “won’t work as intended” and was a “bad idea.”

“Encouraging some people to work more hours is likely to reduce their productivity and harm their wellbeing,” Jessop said.

“Some companies may distribute the same total number of hours worked among a small number of workers, which means some companies are losing jobs.

“The Trump administration has introduced a similar system in the US, and it is already backfiring. For example, some companies are offering more working hours at lower pre-tax rates rather than increasing pay across the board. The US system has also proven to be a nightmare to administer.”

Read more Tories promise to cut taxes and bureaucracy in ‘alternative King’s Speech’

Helen Miller of the Institute of Fiscal Studies also pointed out that this policy is “problematic in principle and practice” and that incentives can lead to distortions.

Tax pledges criticized by Labor and Conservatives

Tory advisers also argued that the policy would increase the risk of tax avoidance and evasion and that the consequences in France would prove costly.

Shadow Prime Minister Mel Stride said the policy lacked “serious thinking” and would not be implemented.

Lucy Rigby, Minister of Finance, said: “If reform wants people to take its unfunded sham plans seriously, it needs to be clear about where the £40 billion in cuts will come from and which public services will pay for them.”

The reforms are estimated to result in about 3.2 million workers receiving overtime pay.

As part of the proposal, the party pledged to change EU laws on working hours to enable people to benefit from tax breaks.

On this day, the Democratic Party of Korea also promised to replace the Cabinet Department with the Prime Minister’s Office and abolish the position of Cabinet Secretary, who oversees public affairs.

Read more IMF tells Reeves to abolish triple lock pensions and enact ‘fundamental’ tax reform Similar tagged content: Sections Categories People & Organizations

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