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The Progressive Policy Think Tank

Sunak plan ‘woefully out of touch’ with reality of cost of living crisis facing millions of the poorest, says IPPR

Think tank economists say measures to help poorest are ‘shockingly inadequate’ and leave millions still facing hardship 

The Chancellor’s spring budget will fail to protect millions of families from a dramatic fall in people’s standards of living and leave the economy at growing risk of recession, according to researchers at the Institute for Public Policy Research (IPPR) think tank. 

Faced with the highest forecast inflation for a generation and warnings that the poorest families risk being pulled further into poverty and debt, Rishi Sunak’s refusal to raise social security benefits faster was a missed opportunity, IPPR said.

Key failures identified by IPPR include: 

  • Measures announced today do not protect the poorest households from the increased cost of living. The cut in fuel duties will have little impact on the overall cost of living and will help the better off more in cash terms than the poorest. 
  • Failing to raise universal credit and other benefits in line with forecast inflation of 8.1 per cent means millions of families will be pulled into hardship as prices soar; merely doubling the discretionary support fund is insignificant when compared to the scale of the crisis 
  • Raising the point at which people start paying National Insurance contributions will bring twice as much benefit to the top 50 per cent of earners than to those in the lower half – where help is most needed. 
  • A missed opportunity to levy a windfall tax on the profits of oil and gas companies that are making hugely increased profits from the dramatic increases in energy prices, to be used to help ordinary families pay their higher bills. 
  • Despite the welcome cut in VAT on retrofit, the failure to address long-term energy security and the need for transition to net zero through investment in renewable energy and building retrofit. 

Carys Roberts, IPPR executive director, said: 

“We’re going into the biggest incomes squeeze in a generation and yet the Chancellor hasn’t offered the help that many households need. 

“His plan is woefully out of touch with the reality facing millions of families, who face being pulled into poverty and debt. To prevent the cost of living crisis becoming a living standards catastrophe, the chancellor needed to find ways to get targeted support to those with the greatest need - but he has sadly failed to ‘do what it takes’.” 

On cost of living Dr George Dibb, head of the IPPR Centre for Economic Justice, said: 

“The Chancellor’s announcements are shockingly inadequate and will not help those who will need it most. We’re going into the biggest incomes squeeze in a generation and once again the Chancellor hasn’t offered the support that many households need. Changes to National Insurance thresholds and cuts to fuel duty will help middle income families more than those in the lowest 20 per cent, and it will help those who are already richest even more. 

“This isn’t only a matter of support for households – if families are spending a bigger share of their income on gas and electricity, they’re spending less in the everyday economy. That fall in spending could tip our economy from stagnation to recession.”  
 
On investment in energy efficiency, clean heat and renewables, Luke Murphy, IPPR associate director for energy, climate, housing and infrastructure, said:  

“Today the chancellor has chosen to leave millions of households in fuel poverty when he should have been providing them with targeted support paid for by a windfall tax on the bumper profits of oil and gas companies. 

“The chancellor’s decision to cut VAT on renovation is something IPPR has long called for but once again he failed to commit the investment needed for a bold energy efficiency and clean heat programme which would help secure the UK’s energy security, net zero and more affordable energy bills for consumers. He remains a roadblock to reform.” 

On help for households Rachel Statham, IPPR associate director for work and the welfare state, said: 

“Energy bills and supermarket prices are going through the roof and low-income families simply have nothing left to cut back on. Lowering fuel duty will fail to lower costs for those on the lowest incomes who are already having to make agonising choices between heating and eating. What’s more, it will do little to bring down the overall cost of living and will bring most benefit to the better off.  

“The Chancellor’s choices have cut low income families adrift, meaning millions of people struggling with rising bills and low incomes will be pulled into debt and destitution. The announcement of £500 million in local crisis funds is an admission of failure while families' budgets are pushed beyond breaking point – a situation that should shame us all.” 

ENDS 

Carys Roberts, George Dibb, Rachel Statham and other IPPR policy experts are available for interview 

CONTACT 

David Wastell, Director of News and Communications: 07921 403651 [email protected]  

Robin Harvey, Senior Digital and Media Officer: 07779 204798 [email protected]  

NOTES TO EDITORS 

IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence. www.ippr.org