Sunak urged to raise benefits by left- and rightwing economists
Chancellor Rishi Sunak faces demands from economists across the political spectrum to increase benefits and the state pension by about 8% in his spring statement next week, in order to help alleviate the worst cost-of-living crisis for decades.
A Resolution Foundation report on the state of the economy on Monday shows that only such drastic action will allow millions of people on low incomes to maintain their living standards at current levels.
Economists from other leading thinktanks – including the right-leaning Centre for Policy Studies – are also urging the chancellor to increase benefits by far above the 3.1% currently planned. This figure was determined last September by the rate of inflation at the time.
While the Bank of England has predicted thatinflation will rise above 7% next month, the war in Ukraine and its effect on energy and food prices has led many economists to predict even more pain, with price rises hitting 8%, and affecting the poorest households most.
The Resolution Foundation’s new modelling shows that a single parent living in rented accommodation with one child, doing 20 hours of work a week supplemented by universal credit, will see the effects of all the recently announced government help with energy bills and benefits more than wiped out by the soaring cost of living, leaving them hundreds of pounds a year worse off.
It says, however, that if benefits were to be raised by a further 5% – taking the total uplift to the staggering level of 8.1% – the difference would be made up and living standards for many of those on low incomes would not decline.
The thinktank predicted last week that typical household incomes would fall by 4% in 2022-23, a cut of £1,000 per household, the sharpest annual income
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