Politics

Sunak ‘made political choice to plunge 1.3 million people into poverty’, chancellor told

MPs grilled the chancellor on his Spring Statement offering "very little" to people on the lowest incomes through the cost of living crisis

cost of living

Sunak told MPs it would not be "responsible" to spend more money on the welfare system. Image: HM Treasury/Flickr

Rishi Sunak has come under pressure from MPs who accused him of making a “political choice to plunge 1.3 million people into poverty” during the cost of living crisis.

Appearing in front of the treasury committee, the chancellor was grilled on last week’s Spring Statement, which the MPs said fell well short of supporting people on low incomes through record-high inflation.

Household budgets are being thrown into crisis by soaring food prices and energy bills which could increase by 54 per cent next month.

Boris Johnson’s government will also increase national insurance payments by 1.25 percentage points in the coming weeks – to tackle the NHS backlog and fund social care in following years – and has resisted calls to increase benefits by more than the planned 3.1 per cent, despite inflation forecast to reach as high as eight per cent.

But Sunak told the committee the government’s measures are “very progressive”.

Mel Stride – Conservative MP and committee chair – said it was difficult to “get away from the fact that if you’re out of work or on benefits there was very little in the Spring Statement”.

Stride asked the chancellor if he had considered increasing social security payments to be in line with the cost of living, instead of pinning the planned increase to inflation figures which are now nearly five months out of date.

However Sunak blamed the computer system used by the Department for Work and Pensions, explaining that there is a “four to five month policy lag between making a decision and implementing it”.

He added: “The wider point is about borrowing and what is responsible. [Increasing public spending] risks stoking inflation even further, harming the people we’re trying to help.

“Someone else could’ve said they’d rather spend the money on the welfare system. That’s absolutely a choice someone else could have made.”

The chancellor also referred to an increase in the taper rate for universal credit, announced in October, which means workers on the benefit get to keep more of their earnings. But he also went ahead with a widely-condemned £20-per-week cut to universal credit in the same month – and now insists cutting taxes is his priority, not increasing welfare funding.

“I think the other policies we’ve got to help people on welfare are the right way to do that,” he told the committee. “The analysis is clear that the actions taken by this government are very progressive.”

UK families are facing the biggest drop in household incomes for 50 years, according to Resolution Foundation analysis, leaving most an average £1,000 worse off per year.

This means the pandemic “may actually have been as good as it gets” in terms of average incomes for at least the first half of the 2020s, the report said.

Sunak told MPs the predicted drop in living standards – which experts warned could be the biggest fall since records began – is driven entirely by global forces and beyond his control, and that people should not “speculate” about further energy price cap increases later this year.

The government announced a support package – of a £150 council tax rebate for this April followed by a £200 repayable “discount” on energy bills on October – which left anti-poverty experts underwhelmed.

“You’ve made a political decision to plunge 1.3 million people, including half a million children, into absolute poverty,” said Labour MP Angela Eagle. “That is what you’ve chosen to do in your Spring Statement.

“A single person caring for their parents, whose main source of income is £67 in weekly carers’ allowance, are not going to be able to accommodate a huge energy bill are they? You’ve not helped them.

“You’ve cut social security benefits by £12bn in real terms. That doesn’t seem the best way of approaching this vicious increase in the cost of living.”

But Sunak defended his record in government, describing himself as “a chancellor who has had to deal with a pandemic”.

“The choice we had was either to cut public spending or continue to deliver on those plans to improve people’s living standards, but make sure it was paid for,” he said.

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