As the cost of food and energy rises at its fastest rate in 30 years, Rishi Sunak has been accused of not doing enough to help the poorest. According to the Resolution Foundation and the Institute for Fiscal Studies, he could have done more to protect those who are most affected by rising costs.
Benefit increases are expected to be much smaller than the cost-of-living increase this year. Mr Sunak believes that tax cuts this year will benefit low-wage workers the most. He claimed that his plans to raise the age at which workers must begin paying National Insurance would benefit people on low and middle incomes in particular.
Boris Johnson, the Prime Minister, also hinted that more assistance for those in need would be forthcoming in the coming months.
“The cost of living is the single biggest thing we’re having to fix, and we will fix it,” the prime minister told LBC Radio, adding, “As we go forward, we need to do more”
In his Spring Statement on Wednesday, Mr Sunak sought to address rising living costs by slashing fuel duty by 5p and softening the blow of April’s National Insurance hike by raising the point at which workers must begin paying it.
Opposition MPs have urged him to do more to help people now, as inflation is expected to hit more than 8% by the end of the year, and UK living standards are expected to fall faster than at any time since the 1950s, according to the Office for Budget Responsibility.
Mr Sunak’s measures, including council tax and energy bill rebates announced last year, amounted to a “relatively modest giveaway” of around £5 billion, according to Paul Johnson of the Institute for Fiscal Studies. “not be enough to protect poorer households from a significant hit to their living standards” he said.
Despite the chancellor’s claims to the contrary, taxes were set to rise to their highest level as a percentage of national income since the 1940s, when Britain was emerging from WWII.
According to a new analysis from the Resolution Foundation, 1.3 million more people will be pushed into “absolute poverty” starting in April, defined as earning less than 60% of the median income in 2010-11.
But, as the chancellor pointed out, this must be viewed in the context of Covid’s “biggest economic shock in over 300 years”
Mr Sunak also used Wednesday’s statement to promise that the basic rate of income tax would be reduced from 20p to 19p in the pound by the next general election in 2024, when he predicted that the UK economy would be in better shape than it is now.
Mr Sunak insisted on Wednesday that the measures he announced would protect the most vulnerable.
He insisted that the recently announced energy bill rebate would also “help people meet the rising price of energy” when the price cap changes in April.
When asked if he would provide additional assistance with energy bills before October, he said, “We will have to see where we are in the autumn.”