“Rishi Sunak has just plunged millions of working-class people into absolute poverty and despair… But Labour is passing up the chance to be the voice for the change that people so badly need.”
By Ben Folley
Chancellor Rishi Sunak’s Spring Statement was delivered in the circumstances of the biggest fall in living standards since records began in the 1950s, yet he both cast aside the poorest and failed to give any real boost to the living standards of the majority of people.
At the start of the day, the Office for National Statistics confirmed that there had been a further rise in inflation to a 30-year high of 6.2% using CPI method (or 8.2% using RPI), meaning that pay and social security payments were shrinking in real terms and needed a boost.
The Office for Budget Responsibility then published its forecasts that real weekly wages to fall by £11p/w (2.0 per cent) in 2022, and fall again in 2023, and that collectively this amounted to the greatest fall in incomes since the 1950s.
Trade unions and poverty campaigners were therefore demanding a significant measure to boost pay and social security measures, both statistically well below inflation. Average weekly earnings are currently rising by 3.7%, though are much lower in the public sector where the government makes the award, and social security and pensions were held down to the September inflation rate of 3.1% despite opposition from campaigners.
Ahead of the Budget, the TUC demanded an immediate boost to the minimum wage and decent public sector pay rises that match inflation and clawed back lost earnings over the decade since the financial crash. Poverty campaigners such as Child Poverty Action Group and Joseph Rowntree Foundation demanded an increase in social security by 8% and a restoration of the £20 universal credit uplift, extended also to legacy benefits.
Demands were also made from across the left and anti-austerity movement, including through the Labour Assembly Against Austerity’s Workers Can’t Wait petition which has been signed by over 15,000 people.
However, Sunak’s offer in the Spring Statement largely cast aside the poorest, particularly those reliant on social security, and the measures he did introduce largely delivered more income to those in higher income brackets.
His increase in the National Insurance Contributions payments threshold of almost £3,000 to the same level as income tax mainly benefits middle earners and does little to help those on low income. The 5p cut in fuel duty will disproportionately benefit those on higher incomes who are more likely to own a car. Analysis by NEF estimates that a third of this tax cut will go directly to the richest 20% of households. And his increase in the Household Support Fund was seen as minimal.
There were no announcements on social security, on increasing wages, or further support for energy bills which the OBR anticipates will increase a further 40% in October, on top of the 54% rise about to hit households.
Summing up Sunak’s inaction, writing for the Peoples Assembly Against Austerity, economist Mick Burke said “The Tory aim is to make workers and the poor pay for a crisis they did not cause – just as it has been ever since 2010.”
On the same lines, Andrew Scattergood, Momentum Co-Chair, said: “Rishi Sunak has just plunged millions of working-class people into absolute poverty and despair. As bills soar and energy giants’ profits skyrocket, the Tories barely lift a finger to help, even cutting benefits and pensions in real terms.”
Analysing the Statement, the TUC found, In 2021, real average weekly wages were already £111per week lower than they would’ve been if they’d kept growing at pre-2008 rates. If wages grow as the OBR forecasts over the next five years, they’ll be £164p/w lower by 2026.
Summarising, the TUC said families are facing soaring bills at a time when their incomes have been squeezed by years of wage cuts and attacks on the social security system. The wages and bills crisis is a consequence of decisions taken by successive governments. Today the Chancellor chose to make the pain last for longer.’
Confirming the Tories are the same old party for the few not the many, the Resolution Foundation actually found the announcements would disproportionately benefit the better off, with only £1 in every £3 in the going to the bottom half of the income distribution.
By avoiding uprating social security payments, the anti-poverty Joseph Rowntree Foundation said, “The Chancellor is avoiding using the tool that is best designed to help people with everyday expenses, which is benefits…Having a few more grants is not going to cut it.” The Child Poverty Action Group added “Today the chancellor could have helped millions of families cope with spiralling costs – but instead he failed the children who needed him the most.”.
Labour MPs also spoke out on the Chancellor’s failure, including Rebecca Long Bailey, who said in an exclusive interview with Labour Outlook (watch and read here) that the Spring Statement was “really bad for people all over the country who are facing the cost-of-living crisis [and] heard nothing to give them any comfort.”
Former Shadow Chancellor John McDonnell meanwhile commented that is was shocking “the Chancellor has done nothing for the poorest in our society, people on benefits and poor pensioners.”
Leeds MP and Socialist Campaign Group chair Richard Burgon said, “Profits are soaring. Living standards are plummeting. The reason the Tories did nothing today to address this is because this is the economy they want: one that serves the super-rich.”
Liverpool’s Paula Barker, said, “Nothing for poorest, no new taxes for richest, lack of help for renters, no attempt to make large corporations take a bigger share of the cost of living pain out of their profits.”
Her neighbour Ian Byrne, said, “Hunger is a political choice and today the Chancellor chose to inflict hunger on communities across the UK.”
Yorkshire MP Jon Trickett said, “offered little to middle or low income earners as those in poverty, whom face deep income squeeze. He also left very wealthy alone so they’ll continue to make unheard-of gains.”
London MP Apsana Begum, said there was, “nothing more for those dependent on benefits” and that a “A bold radical comprehensive rescue package is needed”.
Once again though Labour’s official front bench response again did not go as far as trade unions, anti-poverty campaigners and others are asking, with Momentum’s Andrew Scattergood saying “Labour is passing up the chance to be the voice for the change that people so badly need. Instead of demanding our energy system be taken into public ownership to control prices, the Labour leadership’s proposals would still see bills rise by hundreds.”
Giving a specific example, he added that “While anti-poverty campaigners call for an 8% rise in benefits just to keep people’s heads above water, Rachel Reeves only proposes a 6% increase. For millions on the brink, these half-measures just won’t cut it.”
A Labour Assembly Against Austerity representative commented that, “We collectively have the policy demands to protect and boost incomes, including through Labour’s £15 minimum wage conference policy – moving forward, Labour’s MPs need to work with the trade unions and movements to take up the fight for increased pay and social security and for new measures to hold down soar away costs in vital everyday services like gas and electricity.”
“We now need to build a massive movement that says we will not pay for their crisis, including through backing the People’s Assembly Against Austerity day of action on April 2.”