Social Justice

Rishi Sunak has offered support for cost of living problems the government caused, say charities

The chancellor revealed measures to counter the energy price cap rise. But Tory policies were already making life too expensive, experts said.

energy price cap

Up to 28 million households could receive tax rebates or a loan to pay energy bills. HM Treasury/Flickr

Rishi Sunak’s energy price cap package for families won’t work and comes after the government’s own policies plunged the country into a cost of living crisis, charities have said.

Campaigners criticised chancellor Rishi Sunak for shirking his “moral responsibility” to tackle the cost of living crisis after he delivered his plans to help people through the energy bills increase

Sunak announced April council tax rebates and £200 loans, scheduled for October, to help families stay afloat when average energy bills soar by around £700 to nearly £2,000 in two months’ time.

But people have been pointing out the support package arrives just four months after the Treasury – despite widespread condemnation – cut universal credit payments by £20 per week, amounting to an annual £1,040 loss from household budgets.

And when the energy price cap comes into force in April, ministers will increase basic benefit rates by 3.1 per cent – less than half of the 7.25 per cent inflation predicted for the same month by Bank of England economists.

“Soaring energy prices are the latest battle for low-income families already locked in a permanent cost of living crisis,” said Imran Hussain, director of policy and campaigns at Action for Children, who said Sunak’s plans were “poorly targeted”.

“Just over 100 days ago, the families we help lost £1,000 a year in universal credit, and will now have nearly £700 a year added to their bills,” he added. “The help announced for these families today won’t be enough. We’re going to see more children going hungry as parents struggle to make ends meet.” Campaigners continue to call for the benefit cap and two-child limit on social security payments to be scrapped, citing them as drivers of destitution and higher numbers at food banks.”

The energy price cap will lift at the same time as Boris Johnson’s new health and social care levy is introduced – meaning a 1.25 percentage point increase in national insurance payments, adding even more pressure to household finances.

“All levels of government have a moral responsibility to protect households that are reaching breaking point, but the measures announced by Rishi Sunak today fail to live up to that,” said Peter Kelly, director of the Poverty Alliance.

Sunak wants to give everyone living in council tax bands A to D an average £150 rebate that month, but experts said it would do little to reduce the huge shortfall in family budgets and was not properly targeted at the people who need it.

Meanwhile a decade of cuts to local authority budgets mean council tax bills will need to increase by at least £160 by 2024 just to sustain public services currently offered, the Institute for Fiscal Studies said.

“Three quarters of those who can claim the enhanced support are not in poverty,” said Katie Schmuecker, deputy director of policy and partnerships for the Joseph Rowntree Foundation. “Meanwhile inflation is set to rise at more than double the rate of benefits. This support will not get people through the next few months and it will not protect those most at risk of hardship.

“The chancellor has made his choice, the harder choices will now be coming for those who still can’t afford essentials for themselves and their families.”

Even if every household were to receive the maximum £350 possible under the energy price cap plans announced today, the poorest households will still be spending nearly 20 per cent of their incomes on energy bills, according to the Institute for Public Policy Research (IPPR).

The proposals “amount to a sticking plaster that’s already full of holes,” said Josh Emden, IPPR research fellow.

“In the short-term, the chancellor would have been better off by moving legacy green levies into general taxation and providing targeted support to low-income households through an increase and expansion of the Warm Homes Discount,” he added.

“In the long term, the government should also be investing far more in measures to improve energy efficiency and clean energy and reducing the reliance of the UK on gas.”

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