The Chancellor’s Spring Statement has been universally ill-received. Rishi Sunak has been accused of avoiding significant investment in grants or benefits, and failing to provide substantive support for those most in need as daily living costs skyrocket. The Office for Budget Responsibility (OBR) has predicted the largest fall in living standards in the UK since records began in 1956, while the Resolution Foundation think tank says that 1.3 million people will be pushed into poverty as soon as April. Increases in energy, fuel and food prices, together with the conflict in Ukraine and the impact of the Covid-19 pandemic, have driven inflation to 6 per cent already, with the OBR expecting it to rise to 8.7 per cent by the end of this year.
Some have asserted that Sunak’s plans only help middle and higher earners, while others have noted his complacency in addressing climate change through a lack of largescale government-led interventions. His measures include a surprise tax cut for people who pay National Insurance contributions, scrapping VAT for energy-efficient materials and renewable energy in homes, and cuts to fuel duty. The shadow chancellor Rachel Reeves labelled Sunak a “tax-raising Chancellor”, saying that his tax increases in recent years mitigated any cuts he was now making and accused him of burdening working people during difficult times.
Labour and anti-poverty groups have also criticised him for not raising the rate of Universal Credit by more than the 3.1 per cent announced, far below the rise in cost of living. The government will provide an extra £500m to councils to help families through the Household Support Fund, but Paul Johnson, director of the Institute for Fiscal Studies told the BBC these announcements were “small beer” for people on low incomes.
Spotlight has asked figures from across the policy world to respond to these announcements and other parts of the statement.
“This is a package that won’t close regional inequality”
Andy Burnham, Greater Manchester Metro-Mayor
It seems to me that the Chancellor has chosen to help some people with the cost of living crisis, but has decided against helping all people with the cost of living crisis.
Let me make three points to back up what I’ve said.
I didn’t hear that there was any real help being provided for people on benefits and low fixed incomes, beyond a small move towards more discretionary funding for local authorities. That’s why I’ll be bringing forward my own package of measures to support [local] people with the cost of living crisis.
Secondly, it was clear that the Chancellor had chosen to prioritise some people with the cost of travel, but not all. He’s prioritised motorists, but hasn’t done much for those people who can’t afford to run a car and are reliant on public transport.
A third and final point. If you look at the north of England, there are more people living here who can’t afford to own a car and are reliant on public transport – but there are also more people who are dependent on benefits.
If you take those factors and consider what the Chancellor has announced, you can’t come to anything other than the conclusion that this is a package that won’t close regional inequality, but possibly see it widen over the course of this year.
The question I will put to the government is: is Levelling Up still the core mission of this government? Because there was very little evidence today to suggest that it is.
Comments taken from a meeting held with members of the press on March 23.
“This Statement has a climate-shaped hole at its heart”
Caroline Lucas MP, former Green Party leader
With the triple threat of a climate, energy and cost of living crisis gripping the nation, we needed transformative action from the Chancellor today – yet this Statement feels like a damp squib.
The moment called for a mass retrofit revolution for Britain’s homes – some of the leakiest in Europe – to reduce energy demand, slash household bills and create hundreds of thousands of jobs in the process. But instead this Statement had a climate-shaped hole at its heart, and delivered little more than disappointment. The long called-for VAT cut on energy-saving materials, while welcome, is a measure which alone totally fails to meet the scale of the challenge we face.
On cost of living, the Chancellor’s failure to do more to protect those on lowest incomes isn’t just a crisis, it’s a scandal and a deliberate political choice. He could have introduced a Windfall Tax on the obscene profits of the energy companies and used it to help give real support to struggling households – but he chose not to – and his obstinate refusal to uprate benefits and drop his widely panned National Insurance rise adds salt to the wounds of the worst off.
This wasn’t the Chancellor springing into action – this was him barely lifting a finger.
“The Chancellor has shirked his responsibility”
Dave Innes, head of economics, Joseph Rowntree Foundation
This was a Spring Statement where there should have been a single, clear priority for the Chancellor: to provide support for families at the sharp end of the wave of rising prices that is upon us.
And yet, the Chancellor shirked his responsibility, and instead prioritised tax breaks for middle- and high-income households over preventing a real-terms cut to benefits that will abandon many to the threat of destitution.
The OBR’s latest forecasts now say inflation will reach 7.7 per cent in April. Yet benefits such as Universal Credit – supposed to give people security in the face of economic shocks – will be rising by just 3.1 per cent. That’s a real-terms cut in what those benefits can afford to buy, which comes on top of a decade of cuts and takes the level of out-of-work benefits to a 30-year low.
The consequences will be disastrous. We have recently been hearing of food banks appealing for hot water bottles, of people setting timers on their phone so they don’t have the heating on for more than 30 minutes a day. And this comes when we are only in the foothills of the rising prices that are to come.
He promised to ensure “economic security” and to help “where we can make a difference” – and then he simply didn’t. Instead the Chancellor used his headroom for tax cuts that mainly benefit those that are already secure.
“Today’s Statement was steeped in calculated cruelness”
Larissa Kennedy, NUS UK President
The Chancellor’s Spring Statement is a disgrace for students, young people and graduates. This was a moment where students desperately needed a lifeline from this government; instead, this is a nail in the coffin.
Students are paying hundreds of pounds extra in energy bills, relying on food banks thanks to soaring inflation, and being forced to choose between heating and eating. Instead of addressing these issues, today’s announcements saw the government say that they will be taking an extra £35bn from graduates thanks to their student loan changes over the next five years.
The Statement was steeped in calculated cruelness. With the cost of living crisis getting worse, the Chancellor could have used it as a chance to show he has listened to our experiences. He could have introduced rent protections, offered basic levels of maintenance support, and reversed his plans to cut the student loan repayment threshold. This would have protected the most vulnerable students – so it’s no surprise the government ignored us.
Students from across the UK are desperate for something radically different – that’s why thousands joined the “student strike” earlier this month. As the Chancellor continues to fail students and apply sticking plasters to the current marketised system, it exposes just how broken the profit-driven model is. The government needs to finally commit to a new vision for education, which is fully funded, lifelong and accessible for all.