UK Politics

Britain’s largest network of food banks has warned Rishi Sunak’s refusal to bring benefits in line with inflation will drive more people to emergency food parcels and turn the “cost-of-living crisis into an emergency”.The stark warning comes as the Office for Budget Responsibility (OBR) – the spending watchdog – said Britons are set for the biggest fall in living standards in a single financial year since records began in 1956.Benefits are set to increase by 3.1 per cent, but with inflation expected to average 7.4 per cent over the next year, campaigners had urged the chancellor to intervene and ease the cost-of-living crisis.The OBR added: “In the welfare system, lags in CPI uprating of benefits mean they fall by almost five per cent in real terms in 2022-23, reducing their real value by £12bn, and take almost 18 months to catch up fully with higher inflation”.In a statement Emma Revie, the chief executive of the Trussell Trust food bank group, said Mr Sunak had “failed to create any security for people on the lowest incomes by failing to bring benefit payments in line with the true cost of living in the spring statement.”She said the decision had created a real-terms cut to social security payments, which, she described as “dangerously insufficient”.After a leading supermarket boss claimed some food bank users were declining potatoes and root vegetable because they cannot afford the energy to boil them, Ms Revie said: “People are already making impossible decisions between heating and eating, and we know people are skipping meals, unable to afford to run cookers and fridges and taking on debt to buy the essentials.”She added: “This decision will mean many more people will have no option but to use a food bank. By failing to make benefit payments realistic for the times we face, the government is risking turning the cost-of-living crisis into an emergency.“People cannot afford to wait another year for this to be review. Action to rectify this situation and strengthen our social security system needs to happen immediately”.The homelessness charity Crisis also warned that despite Mr Sunak’s measures on Wednesday, “[The spring statement] will not give support to families facing the cost-of-living crisis”.Chief executive Matt Downie added: “What’s clear from this statement is that people up and down the country will be pushed into homelessness.”Speaking after the chancellor’s spring statement, Paul Johnson, of the Institute for Fiscal Studies (IFS), told Politics Live: “What was completely missing was anything for people on universal credit or the state pension, which is only going up by 3.1 per cent this month when inflation will be around 8 per cent. “It’s a big cut in living standards for those on the very lowest incomes”.Tackled on the issue of benefits in the Commons – after delivering the spring statement – Mr Sunak pointed to the autumn Budget when the government reduced the universal credit taper rate.He added: “I am pleased and proud of the fact that because of the actions of this government, increasing the national living wage in April by 6.6 per cent, by cutting the universal credit taper rate, and indeed by the increase in personal thresholds today.“Taken altogether, all tax and welfare changes, that single mother of two children working full-time on the national living wage will now be £1,600 better off.” More

Rishi Sunak has told a young woman struggling to find work to be “optimistic” because “lots of jobs” are being created at a new local freeport.The chancellor made the recommendation as he was confronted by protests that he has turned his back on benefit claimants – faced with a big cut in income, after he refused to halt real-terms cuts in payments.On a phone-in, 24-year-old Sarah, from Grimsby, warned that young people in her area “don’t have much hope for the future”, because of a lack of jobs and high house prices.“I can’t count the amount of jobs have applied for,” she told Mr Sunak, adding: “People don’t want kids because they can’t afford them. They’re putting off starting families.”In response, the chancellor urged Sarah to join the Kickstart scheme which had helped 125,000 young jobless people into work – although he then admitted it would be wound up next week.And, speaking on LBC Radio, Mr Sunak said: “The other thing we’re doing in your part of the world, actually, is creating a new freeport.“What that will do is create a zone in your part of the world which will mean that jobs are created as companies invest, because we’re providing them with lots of incentives to do so.”He added: “Yours is one of the first areas that is taking advantage of those new freedoms and there’s already been some announcements, with Siemens and other companies, and lots of jobs have been created.“So I’m optimistic about your part of the world, partly because of that new freeport that’s going to come in there.”During the phone-in, Mr Sunak also:* Rejected criticism that benefit claimants have been let down, as the uprating falls far short of rising inflation – arguing it is better to help them find “good jobs”.* Said the government is spending £58bn on disability benefits – “more than ever” and more than Japan, Germany or Austria.* Argued it would be the “easiest thing in the world” to bow to pressure to impose a windfall tax on soaring gas and oil company profits – but that would cut investment.* Ducked a call from the ‘Patriotic Millionaires’ group to impose a wealth tax on the super-rich – but said there was a mechanism for them to pay more tax voluntarily.* Refused to say if he wanted to be prime minister “one day” – because he is focused on “everything that is on my plate at the moment”.The phone-in came after a spring statement which has still left Britons heading for the biggest fall in living standards since the 1950s, experts are warning. More

Britain is heading for its biggest fall in living standards since the 1950s this year, despite a mini-Budget in which chancellor Rishi Sunak slashed £330 off national insurance for the average worker and took 5p off the tax on a litre of petrol.The chancellor also promised a 1p cut in the basic rate of income tax in 2024, in what was immediately denounced as a pre-election bribe.But he did nothing for the poorest, who see welfare benefits far outstripped by inflation which is expected to peak close to 9 per cent this year. And he rejected opposition calls for a windfall tax on the bumper profits of North Sea oil and gas companies to pay for a cut in VAT on energy prices.An offer of zero-VAT rating for green home improvements, including the installation of solar panels and heat pumps, fell far short of the immediate help sought by households facing an average £600 leap in domestic gas and electricity bills in eight days’ time and a further hike of similar magnitude in the autumn.Martin Lewis, who runs the Money Saving Expert website, said his head “sunk” when he heard the chancellor’s “limited” measure on energy, adding: “It won’t impact the majority of households who will see a likely £1,300 average increase in year-on-year bills by October.”The government’s official forecasters, the Office for Budget Responsibility, said that the impact of rising prices will mean real household disposable incomes per person falling by 2.2 per cent in 2022-23 – “the largest fall in a single financial year since ONS records began in 1956-57”.The OBR said that changes announced in Mr Sunak’s spring statement – billed by the Treasury as the largest tax cuts for a quarter of a century – did no more than remove one-sixth of the tax hikes he had previously announced since becoming chancellor in 2020.Even after the £6bn cut in national insurance contributions (NICs) coming into effect in July and the £5bn reduction in income tax in 2024, the OBR said that the overall tax take will rise from 33 per cent of GDP in 2019-20 to 36.3 in 2026-27 – its highest level since the 1940s.The respected Institute for Fiscal Studies think tank said that the total impact of changes introduced by Mr Sunak will see almost all workers paying more tax on their earnings in 2025.Sunak was “giving with one hand on tax, having previously taken away with the other”, said the IFS, as unexpectedly high inflation saw his earlier freeze on income tax thresholds turn into a massive revenue generator, dragging many more workers into higher rates and more than paying for the spring statement giveaways.The chancellor won room for manoeuvre thanks to a £15bn windfall from additional tax receipts, as well as £5bn from increased student loan repayments, giving him the flexibility to pre-announce a cut in the basic rate of income tax without breaking his rules on debt and borrowing. The new 19p basic rate will be the lowest since the First World War.But the OBR warned that uncertainties resulting from the Ukraine war and volatile energy prices meant that his calculations “could be wiped out by relatively small changes to the economic outlook”. More

Boris Johnson giggled and pulled funny faces as the Commons was reminded of the suffering of Ukrainians “huddled in basements”, triggering strong criticism.The prime minister was accused of being “beneath contempt” when his joking and gurning were captured on camera during Rishi Sunak’s tribute to the “bravery” being shown under Russian fire.“As I stand here, men, women and children are huddled in basements across Ukraine seeking protection,” the chancellor said – while Mr Johnson curled his bottom lip and wiggled his eyebrows.“The sorrow we feel for their suffering, and admiration for their bravery is only matched by the gratitude we feel for the security in which we live,” MPs were told.The gaffe follows condemnation of the prime minister for his weekend claim that Ukraine’s fight for survival against Russia is like the Brexit referendum vote.Chris Bryant, a Labour member of the Commons foreign affairs committee hit out at Mr Johnson for his latest insensitivity, during the chancellor’s spring statement.“This man is beneath contempt. It’s spine-tingling what little respect he has for others who are less fortunate than himself,” he said.Layla Moran, the Liberal Democrats’ foreign affairs spokesperson, said: “It’s all a joke to Boris Johnson. His buffoonery is a national embarrassment.“He should apologise to the people of Ukraine. Their bravery stands in great contrast to Johnson’s childish behaviour.”The prime minister’s likening of Ukraine’s struggle to the UK leaving the EU has been attacked by the former Ukrainian president, Petro Poroshenko, as he donned a bullet-proof jacket in his invaded country.“How many Britons died because of Brexit? Zero,” he asked, adding: “Only today we have 150 Ukrainian children who were killed by Russian soldiers and Russian artillery.“Can I ask you how many houses were destroyed because of Brexit? We have whole cities that have been completely destroyed. With this situation, please, no comparison.”Mr Johnson’s spokesman refused to withdraw his remarks, made to the Tory spring conference, arguing both struggles displayed a “desire for freedom”. More

Rishi Sunak has offered some new help through the tax system for millions of workers worried about the mounting cost-of-living crisis and the impact of the Ukraine war on the economy.The chancellor cut 5p off fuel duty and eased some of the burden from the forthcoming national insurance hike by raising the threshold at which people start paying by £3,000.However, Labour dubbed the chancellor “Alice in Sunak-land” and accused him of ignoring the scale of the crisis since there was no new help on energy bills or benefits. The Independent took a closer look at what he left out.Universal Credit and other benefitsThe chancellor chose not to act on calls from Labour, campaigners and experts to boost universal credit and other benefits to keep pace with inflation and ease the burden on the very poorest.While benefits will increase 3.1 per cent next month as previously planned, Mr Sunak did not announce any further increases – despite inflation jumping to 6.2 per cent.Institute of Fiscal Studies (IFS) director Paul Johnson said it would not been enough to meet expected inflation levels of 8 per cent – and warned that those on means-tested benefits were facing cost-of-living increases of 10 per cent.The IFS expert said it meant a “big cut in living standards” for those on the lowest incomes. “What was completely missing was anything for people on universal credit or the state pension,” said Mr Johnson.The Trussell Trust – the nation’s largest network of food banks – said it would mean “many more people will have no option but to use a food bank” this year.Mr Suank did say he would double the emergency Household Support Fund – aimed at allowing local councils to distribute hardship funds to the very poorest – to £1bn.But Citizens Advice said the chancellor’s statement was “very disappointing … it will barely touch the sides of the crisis and the unprecedented demand we’re seeing”.Energy bills and windfall taxMr Sunak resisted Labour and Lib Dem demands for a windfall tax on oil and gas giants, after the opposition urged him to raid record profits and use it to ease the burden on families struggling with energy bills.In fact, there was nothing new in the chancellor’s spring statement that would reduce household bills, despite record inflation and the added impact of Russia’s Ukraine invasion.The chancellor had already announced a £200 loan for gas and electricity payments from the autumn, although not until the price cap jumps 54 per cent in April – with further hikes expected in October.Labour’s shadow climate secretary Ed Miliband tweeted: “The rise in energy bills is a national emergency. Rishi Sunak thinks £200 of loans is the answer. He just doesn’t get it.”Money saving expert Martin Lewis said his head “sunk” following Mr Sunak’s plan. He said it “won’t impact the majority of households who will see a likely £1,300 average increase in year-on-year bills by October”.Spring Statement: Rishi Sunak increases household support found to £1bnGreen levies on energy billsSome “net zero” sceptic Conservatives had been particularly keen to see the chancellor cut VAT and green levies on energy bills.But Mr Sunak decided to keep the green levies aimed at paying for energy efficiency measures and the move towards renewable energy.Backbench Tories had also urged the chancellor to use some of “financial headroom” to go further on tax cuts, after reported forecasts showing that the deficit was better than expected this year.But Mr Sunak set aside some of the better-than-expected revenues for dealing with the deficit, rather than investing the full sum in driving down the cost of living.The chancellor did announce that VAT will be cut to zero on energy efficiency products such as solar panels, heat pumps and insulation for the next five years.But Green MP Caroline Lucas claimed there was “a climate-shaped hole at the heart of this statement” – saying the zero VAT incentive was not enough to deliver a “home retrofit revolution”.Spending on militaryBoth Labour and Tory MPs had urged the chancellor to boost defence spending in light of Russia’s war on Ukraine, and the heightened threat level the invasion brings.John Healey MP, shadow defence secretary, said there was a “deafening silence” from Mr Sunak when it came to defence spending.“The spring statement had no halt to army cuts, no review of defence spending, no reform of military procurement and no change to the real cut in day-to-day MoD spending which means less money for forces recruitment, training, pay and families,” he said.Mr Sunak said that there was a “moral responsibility” to help Ukraine and impose sanctions on Russia – but warned it would not be “cost-free” for the UK economy.Fall in living standards and tax burdenMr Sunak claimed his statement amounted to “the biggest net cut to personal taxes in over a quarter of a century”.But the Office for Budget Responsibility (OBR) said the tax burden is set to hit its highest level since the 1940s. The amount of tax paid compared to gross domestic product will hit the highest level since the years after World War II.The chancellor also failed to mention that the OBR predicted the biggest drop in living standards in more than 60 years. The public body predicted a significant cut in disposable incomes – saying it would be the biggest drop in spending power since records began in 1956. More

Rishi Sunak is scooping a staggering £5bn from a shake-up that will force many more students to pay back their loans, helping to fund his tax cuts.Last month’s overhaul of student finance – requiring graduates to start repayments with lower earnings and to pay off debts for 40 years, instead of 30 – was widely criticised as unfair.Proposals to bring back maintenance grants for low-earning families and to slash annual tuition fees from £9,250 to £7,500 were rejected.Poorer students will lose out, while top-earning graduates pay less, as the proportion repaying their loans in full soars from around 25 per cent to 70 per cent.Now the Treasury watchdog’s book reveals the changes will bring in £5bn a year – accounting for more than one quarter of Mr Sunak’s higher-than-expected receipts in his spring statement.Of the overall £19bn gain, compared with last October’s Budget, £10bn is being spent on slashing taxes, in particular hiking the national insurance threshold, with the rest used to cut borrowing.The watchdog, the Office for Budget Responsibility, states: “The reforms amount to the equivalent of an income tax rise for most existing and new students over their working lives.”The real-terms cut in the repayments’ threshold, combined with 40-year repayments, are “equivalent to imposing a 9 percentage point marginal income tax rise”, it says.The student loans shake-up – a long-delayed response to a report to Theresa May three years ago – will:* Freeze maximum fees at £9,250 a year until 2025, meaning they will not have risen for seven years – while rejecting a cut to £7,500.* Cut the repayment threshold to £25,000 for students starting courses from September 2023 until 2027 – despite the backlash against the recently-announced freeze.* Extend the period before loans are written off from 30 to 40 years for new students – meaning many will be nearing retirement before they are out of debt.* Deny loans to students who fail to achieve at least two Es at A-Level or at least a Level 4 pass in English and maths at GCSE.* Link the student loan interest rate to the – higher – RPI measure of inflation, scrapping interest for students from 2023, both during studies and after graduation.Labour described the package – three years after the Augar report was published – as “another stealth tax for new graduates”, which would be “slamming the door on opportunity”.The Education Policy Institute think-tank warned it would be “regressive” and threatened to hit “students from disadvantaged backgrounds”. More

Rishi Sunak has said he will cut the basic rate of income tax from 20 to 19 pence in the pound before the end of the current Parliament, in 2024.The chancellor’s announcement came as he again resisted calls to drop a hike in national insurance contributions by 1.25 percentage points from 1 April for the vast majority of workers.But he also used the spring statement on Wednesday to increase the national insurance threshold by £3,000, which he described as a “tax cut for employees worth over £330 a year”.Turning his attention to the next general election, he told MPs a “clear goal” of Conservative chancellor’s has been to cut income tax, but said: “The fact this has only happened twice in 20 years tells you how hard it is to”.“Covid and the war in Ukraine have only added to the difficulty of achieving this by the end of this Parliament.”He added: “It would clearly be irresponsible to meet this ambition this year — and yet I refuse to let that ambition wither and drift. “By 2024, the OBR currently expects inflation to be back under control, debt falling sustainably, and the economy growing. Our fiscal rules are met with a clear safety margin.“So, my final announcement today is this: I can confirm, before the end of this Parliament, in 2024, for the first time in 16 years, the basic rate of income tax will be cut from 20 to 19p in the pound.“A tax cut for workers, for pensioners, for savers. A £5 billion tax cut for 30 million people. It is fully costed and fully paid for in the plan announced today.”But Paul Johnson, the director of the Institute for Fiscal Studies (IFS), said: “Oh for goodness sake. What is the possible justification for cutting income tax rate while raising NI rate?“Drives further wedge between taxation of unearned income and earned income. Yet again benefits pensioner and those living off rents at expense of workers”. More