The Chancellor unveiled his Spring Statement today in the midst of an unprecedented cost of living crisis. Household energy costs are soaring, prices of everyday essentials are rising, and the government is ploughing ahead with a National Insurance rise that will impact millions of working families across the country. According to a survey I carried out in Newport East last month, 95% of respondents had seen an increase in the cost of living; 76% had cut back or made difficult choices to try and save money; and over 15% had used food banks. This is a crisis that is already here, and will only get worse when the energy price cap is lifted next week – National Energy Action have warned that 6.5 million UK households are facing fuel poverty.
So what did we get from the Chancellor today?
There was a cut on VAT for petrol by 5p a litre until 2023. Given that petrol prices have gone up by at least 40p in the last year, motorists will still be feeling the pinch. And this is a move that will be of the greatest benefit to the most well-off – it is estimated that just 7% of the savings from the cut will go to the poorest 20% of households, while 30% of savings of the cut will go to the richest fifth of the population.
There was an announcement of an extra £500million for the household support fund. In practice this won’t touch the sides for most households, and it is already well below the equivalent support the Welsh Labour Government are already offering in Wales.
The Chancellor announced a 1% cut in income tax from 20% to 19% by the end of 2024, but this is offset by the increase in National Insurance by 1.25% – an increase that is going ahead at precisely the wrong time. Let’s not forget that at a time when working people’s incomes are being targeted, non-salaried sources of income like stocks, shares and property sales are going untouched. That tells you everything about where this government’s priorities lie.
Vitally, there was nothing in the Chancellor’s statement to help with rising energy costs. Rishi Sunak again rejected Labour’s proposal of a windfall tax on North Sea oil and gas prices to fund a VAT cut on energy bills – a move that would have given all households at least £200 off their gas and electric bills, and allowed for an expansion of the Warm Homes Discount.
That’s not all that was missing from the Chancellor’s speech today. There was not a single reference to Wales, with the government’s previous bluster about ‘levelling-up’ the nations and regions of the UK seemingly consigned to the sidelines. There was no new funding for our police either, and nothing for our steel industry which continues to call out for action on sky-high industrial energy costs.
The hard truth is that this Chancellor hasn’t got a clue. He has left households and businesses to fend for themselves in the middle of a devastating cost of living crisis. Even after the changes today, under the Conservatives, Britain is facing the highest tax burden in 70 years, with the Chancellor confirming £24 billion of additional tax rises about to hit. This is not a government on the side of working people. I agree with the comments made by the Shadow Chancellor Rachel Reeves today – this is a government that talks about providing security for working families, but makes choices that deepen the cost of living crisis. They simply don’t get it.