Monday, April 22

The UK’s poorest people have been utterly abandoned by this ideological chancellor | Paul Kissack

I can’t recall a worse fiscal event than Wednesday’s spring statement.

It had nothing meaningful to say on the big strategic challenges our economy faces. According to the prime minister, leveling up is the defining mission of this government. The chancellor couldn’t bring himself to even mention it. There was similarly nothing to learn about net zero or the UK’s productivity challenge.

It was fiscally inconsistent. Even the mild-mannered Institute for Fiscal Studies was left shouting “Oh for goodness sake” at the news that Sunak is raising national insurance while cutting income tax, increasing taxes on people who work to protect the incomes of those who often don’t, including landlords and wealthy pensioners.

As a set-piece event, it unraveled within hours. Sunak woke up on Thursday to a full spread of hostile front pages. During media interviews that morning, he became increasingly rattled and tetchy. He seemed taken aback that so many of the questions put to him focused on those who will struggle most to bear the cost of living crises.

This should not have come as a surprise. The rising cost of essentials affects us all, but not equally. People on the lowest incomes are at greatest risk, because unavoidable spending on energy and food takes up a higher proportion of their budget than any other group. Already they have nothing to cut back on.

Faced with the greatest threat to living standards for generations, it is impossible to justify the decision to leave almost everyone at the sharp end of the crisis out in the cold. Rather than strengthen the support available, he chose to cut benefits in real terms, leaving households in poverty £445 out of pocket for the year ahead; 600,000 more people will be pulled into poverty by this decision. Around a quarter of them are children.

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The new tax changes that were announced deliver nothing for people who are unable to work and those earning too little to pay tax or national insurance. Many low earners who earn just enough to gain from the rise in the national insurance threshold will find more than half the gain tapered away through the subsequent reduction in their universal credit.

The chancellor’s response to challenges on his lack of action was that he had prioritized people in poverty in his budget last autumn. That, you might recall, was when he cut universal credit by £20 a week, in the face of widespread opposition, including from many of his own backbenchers. Some prioritisation.

Dealing with a cost of living crisis of the current scale was never going to be an easy task. It called for the best tools available. The additional £500m announced for the household support fund is dwarfed by the cut to benefits and the scale of need that councils now expect to see. Equally frustrating is the difficulty people have accessing what little support there is. It must be sought out, applied for, and different criteria navigated depending on the local area. Many of those who jump through these hoops will find they are ineligible for any support.

Go on the government’s own website and you will find a clue to another tool available. In answer to the question “what is universal credit?” the website says it is “a payment to help with your living costs”. The government spent several years and many millions of pounds building the system. In the pandemic, it showed that the government really wasn’t helpless in the face of a crisis and could provide a lifeline to those at risk of being dragged into poverty. But now the chancellor’s ideological resistance to using that tool means he is cutting people adrift.

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The basic rate of social security will soon be at a 35-year low. The impact of this has been steadily growing clearer. Even before the pandemic, dismissal was rapidly growing in scale and intensity. On the brink of the pandemic, a large and increasing number of children were growing up in very deep poverty. The pandemic itself had disastrous and well-documented effects. But most worrying of all are the predictions for the year ahead, as inflation reaches a 30-year high. The fact that food banks have once again been called upon to deliver their verdict on the chancellor’s statement should tell us all we need to know.

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