22 Britain TheEconomistMarch26th 2022
lowering fuel duty from £0.58 to £0.53 per
litre. In three months’ time the threshold
for starting to pay nationalinsurance con
tributions will be aligned with that for pay
ing income tax—a welcome simplification
and a political promise fulfilled. The mar
ginal standard rate of income tax will fall
from 20% to 19% in April 2024. The more
immediate of these measures should offset
around a third of the expected hit to in
comes in the fiscal year starting in April
2022, limiting it to a drop of 2.2% (see chart
1 on previous page).
The moves placated the right wing of
the Conservative Party, which has fretted
about Mr Sunak’s taxandspend ways,
such as a big planned increase in the rate at
which workers and employers pay nation
al insurance, which is intended to help
fund social and health care. But if what
matters politically is the gap between vot
ers’ incomes and outgoings, they should
wait before cheering. In 2024 the fact that
incometax thresholds have been frozen
for years will offset the gains of a lower in
cometax rate for anyone earning less than
£49,000 a year. More broadly, the policies
revealed on March 23rd offset only around
a sixth of previously announced increases
in tax as a share of gdpbetween 201920
and 202627. Even after taking them into
account, the tax take as a share of gdp is ex
pected to increase by 3.3 percentage points,
bringing it to 40.1% by the end of that per
iod, the highest in four decades.
Mr Sunak will doubtless face further
calls to keep shaving away at planned tax
increases. But some caution is warranted
when it comes to the public finances. Fall
out from the conflict in Ukraine could start
to erode tax revenues, if a sustained in
crease in energy prices drags down gdp.
The obr noted that a new vaccineresistant
strain of covid19 could yet emerge, which
could damage the economy and push bor
rowing higher.
The decision not to do more to soften
the blow of rising living costs for the poor
est voters is itself a gamble, however. Of every £3 in extra support the chancellor an
nounced, £2 will go to the richest half of
households, according to analysis by the
Resolution Foundation, a thinktank (see
chart 2). Households reliant on benefits
will be pinched by incomes that increase
by just 3.1%, even as inflation rips above
7%. The real value of benefits is expected to
fall by £11bn in the coming year, meaning
that an extra £500m in the Household Sup
port Fund, a pot of money from central
government that councils can use to helppeople who are struggling, will not go far.
Mr Sunak appeared resolute, making it
clear that any further giveaways would go
on lower taxes, not higher spending. He
promised that this autumn he would in
crease incentives for business investment.
Perhaps he is hoping to fight the next elec
tion (one is due in 2024) vindicated, and
crowned the king of tax reliefs. But with
such a large hittoincomes looming—and
such big tax increasesstill to come—that
seems optimistic. nMatthew effect
Britain, increase in disposable income* due
to policies in the spring statement, 2022-23Source:Resolution
Foundation*Afterhousing costs
†Excludedasdataunreliable2500
400
300
200
100
01.5
1.2
0.9
0.6
0.3
0
1051 15 20
Incomeventile% £←Poorer Richer →NationaI-insurance
threshold increase† Fuel-duty cutW
hat warmweatheristoicecream
vans and popcorn is to dentists,
Saharan dust storms are to car washes. A
big dust cloud like the one that reached
Britain on March 16th boosts revenues by
about a quarter, according to Kevin Pay of
Wilcomatic, which runs about 800 auto
matic car washes in Britain. “You love to
see it,” he says, as a dusty red Ford Ka
joins the queue in Hove in East Sussex,
on the south coast.
Until recently Britain’s drivers usually
took their dirty motors to car parks and
disused petrol stations, where eastern
European immigrants had at them with
sponges. In 2018 a parliamentary com
mittee was informed that Britain had
10,00020,000 hand car washes, com
pared with 2,000 automatic “rollover”
machines and about 4,000 doityourself
jet washes. Hand car washes were more
convenient—drivers simply handed
money through the window rather than
traipsing into a petrol station to buy a
sixdigit code—and often cheaper than
machines. The industry was a rare ex
ample of deautomation.
It is now reautomating. Mr Pay says
that Wilcomatic’s carwashing revenues
in 2021 were 15% higher than in 2019,
before covid19 arrived. “It’s starting to
turn,” agrees Chris Scott of Istobal, an
other carwashing firm, who says that
sales of the chemicals used by machines
are higher than they were before the
pandemic. At Parkfoot Garage in Kent,
David Charman says his four jet washes
have been “absolutely flat out” since the
dust storm. He has acquired another
carwash site and is seeking a third.
Automatic car washes and jet washes
have improved, with contactless pay
ment, superior brushes and theatrical
foam. But the main reason for their
popularity is that hand car washes are
disappearing. The informal ones can be
lousy employers: in 2016 a study ofLeicesterbytwoacademics,Ian Clark
and Trevor Colling, found that many paid
less than the legal minimum wage. Car
washing is a typical first job for an un
skilled immigrant. And Brexit means
that Britain has fewer newly arrived
unskilled immigrants these days.
Covid19 further tilted the market
towards machines. The government shut
down hand car washes for longer than
automated ones, on the ground that they
posed a higher infection risk. The pan
demic also discouraged drivers (and
everyone else) from paying with cash.
That hurt informal car washes, which
love cash in part because it allows them
to dodge tax.
Alexander Russell of the Car Wash
Association, a trade group, says that the
industry has gone in a circle. Some petrol
stations are now putting automatic
carwashing machines into bays that
were originally built for them, but were
then occupied by hand car washes. Car
washing has been in a lather, but it is
emerging cleaner.CarwashingAll in a lather
H OVE
An industry that de-automated is now re-automatingKeep those rags and machines humming