The Guardian view on Sunak’s spring statement: a big cut in living standards
Rishi Sunak’s spring statement is a strategy for inequality. The war in Ukraine and post-pandemic disorder have sent fuel and food prices soaring. The rise in inflation to a 40-year high is expected to reduce real household disposable incomes by 2.2% in 2022 – the biggest fall in living standards since records began in 1956. Energy bills could top £3,000 a year. Without help, warm homes and warm meals might become the preserve of the top half of British society.
Yet the IPPR thinktank says that the poorest get just £120 help to offset rising costs in the spring statement, while the richest are given a £480 boost. The money was available to hand out. Economic growth meant the chancellor had almost £20bn of fiscal headroom within his self-imposed rules. By not uprating benefits or the state pension, which are only going up by 3.1% this month when inflation will be about 8%, Mr Sunak has delivered a big cut in living standards for the poor.
As government department budgets are set in cash terms, higher inflation will mean either public servants like teachers taking large real pay cuts – politically difficult if private sector wages are rising more quickly – or cutting back on the services they provide. Mr Sunak should have at least reinstated the universal credit uplift of £20 a week and committed more cash for free school meals, rather than spend £10bn reducing government borrowing.
Mr Sunak spent the other £10bn from his windfall on tax cuts – stung by Labour taunts over his “high tax policy”. The chancellor’s spring statement undid about a sixth of the overall net tax rises he has announced. Set against his own arguments, Mr Sunak’s national insurance cut makes no sense. For six months the chancellor insisted that he needed
Read more on theguardian.com
