Rishi Sunak announced £9bn of support – but admits it will only cover half the rise in energy bills. Image: Parliament
Anti-poverty campaigners have said Chancellor Rishi Sunak’s Spring Budget will leave families “stranded” in the cost of living crisis after it failed to uprate universal credit or offer explicit support for energy bills.
It comes as the chancellor announced an extension of the Household Support Fund beyond March, an increase to the national insurance threshold by £3,000 to £12,570 a year and a decrease to the basic threshold for income tax from 20 pence in the pound to 19 pence by 2024.
Wages across the UK are already falling at the fastest rate since 2014 due to rising inflation, which reached 6.2 per cent in February, double the uprate of 3.1 per cent for universal credit. Energy prices, which were already on the rise, have been hit hard by the Ukraine crisis. And average rent and mortgage payments, as well as food prices, have risen rapidly.
From April, households will face a council tax hike and soaring energy bills as the price cap rises by 54 per cent.
Despite this, Sunak’s statement – often referred to as the Spring Budget – included nothing for universal credit claimants and no explicit help for households struggling with energy bills.
Woefully out of touch
Carys Roberts, executive director of IPPR think tank
Researchers at the Institute for Public Policy Research (IPPR) think tank said the plan is “woefully out of touch,” adding that he has “failed to ‘do what it takes'” to tackle the cost of living crisis.
Carys Roberts, the think tank’s executive director said: “We’re going into the biggest incomes squeeze in a generation and yet the chancellor hasn’t offered the help that many households need.”
She added: “To prevent the cost of living crisis becoming a living standards catastrophe, the chancellor needed to find ways to get targeted support to those with the greatest need – but he has sadly failed to ‘do what it takes’.”
Dr Silvia Galandini, Oxfam’s domestic poverty lead, said the announcement will “do little” to help low income families.
“By only increasing benefits to 3.1 per cent – half the rate of inflation – he has effectively cut benefits twice now in six months, risking an additional 400,000 people being pulled into poverty,” she said.
She added that while today’s measures are welcome, they don’t go far enough to help the most vulnerable.
“Today’s headline measures of cutting income tax and increasing the national insurance threshold will be of no help to people out of work or the lowest paid,” Galandini said.
In response to the announcement, women’s charity Solace Women’s aid called the increase to the Household Support Fund “a drop in the ocean compared to what women and families are facing in the cost of living crisis.”
It added: “Action on fuel duty and income tax is welcome but doesn’t target support to those who need it most.”
Dave Innes, head of economics at the Joseph Rowntree Foundation, also called the Household Support Fund increase “a drop in the ocean” and accused the chancellor of “acting recklessly.”
He said: “Security is only real if it’s for everyone – the choices the chancellor has made won’t deliver any security for those at the sharpest end of this crisis, instead he has abandoned many to the threat of destitution.
“The chancellor has acted recklessly in pressing ahead with a second real-terms cut to benefits in six months, while prioritising people on middle and higher incomes.
The chancellor has failed the children who needed him the most
Sara Ogilvie, policy director, Child Poverty Action Group
Child poverty campaigners said that the chancellor’s measures “don’t come close to bridging the gap between what the lowest income families have and what they need, and will leave many stranded in the face of the highest prices in a generation.”
Responding to the statement, Sara Ogilvie, policy director of Child Poverty Action Group, said: “The chancellor should have increased benefits to match inflation – the most efficient way to help hard-pressed households. But on current plans he will impose a real terms cut of £663 on families on universal credit at the worst possible time. That will leave millions without enough to live on.
“Government needs to do more to show it understands the reality of life for parents and children across the UK. Anything less than urgent action on benefits and we’ll have more parents in debt, more hunger, more children without essentials. But for today, the government looks increasingly remote from real life families.”
Unite the Union said the statement “tinkers around the edges” of the cost of living crisis and will leave workers “overwhelmed by rocketing prices.”
Unite’s general secretary Sharon Graham said: “With inflation at its highest for 30 years, Rishi Sunak’s Spring Statement just tinkers around the edges of this shocking cost-of-living crisis.
“Workers will still be facing sleepless nights worrying about how to make ends meet, overwhelmed by rocketing prices
“His Spring Statement does nothing to tackle the corporate elite, the billionaires who stash their loot but sack UK workers by Zoom. Once again, ordinary working people bear the broadest burden while the super-rich get off scot-free.”
The Work Rights Centre, which advises migrant workers on employment, housing and access to universal credit, also criticised the chancellor for failing to raise the benefit to meet inflation.
“The people we support are often trapped in precarious work, where the pay is so low and the shifts so irregular that they are effectively forced to rely on Universal Credit in order to make ends meet,” CEO Dr Dora-Olivia Vicol said.
She added: “We had hoped the chancellor would increase benefits in line with inflation – which the OBR has projected to reach a 40-year high this year.
“Increasing them by 3.1 per cent is better than nothing, but only in the same way that half a life jacket is better than no life jacket at all. It’s still not fit for purpose.”
Charity Turn2Us also hit out at the absence of additional benefits support.
Head of information programmes Michael Clarke said: “Millions of people will face a real-terms benefits cut come April, and we are disappointed the chancellor did not use this opportunity to uprate benefits in line with inflation to mitigate this.
“We’re already hearing how many household budgets simply can’t stretch anymore. We must not underestimate the scale of the crisis we are facing, especially as the next 12 months will result in thousands of people facing impossible choices between keeping a roof over their heads or feeding their children to survive.”
The Social Market Foundation think tank said the £500m Household Support Fund did “far too little” to support the poorest in society.
Chief economist Dr Aveek Bhattacharya said: “The statement failed to measure up to the hardship in store for the poorest families, who face deep economic pain unless further action is taken. The hit to living standards is set to be on a similar scale to the worst recessions, but the chancellor’s response was far from the adaptable ‘whatever it takes’ approach he took to the pandemic response.”