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We need an emergency budget to tackle the cost of living crisis

Published date
Families across the country are facing a budget emergency as rises in energy bills far outstrip increases in pay, benefits and pensions. The Chancellor had the opportunity to help them out in his spring statement last week but chose not to take it.

We’re calling for an emergency budget so the Chancellor can deliver the help families need. Sign petition

Energy bills are set to go up by 54 per cent today – leaving families facing an average annual bill of £2,000. And they’re set to rise again in October. In contrast, wages are rising by a maximum of 5.2 per cent this year (according to the OBR), and benefits and pensions are going up by just 3.1 per cent.

That’s leaving families facing a huge squeeze on their incomes. Those on the minimum wage will be £200 a year worse off in real terms, after the 6.6 per cent rise in the national living wage fails to keep up with inflation. The six million families who use universal credit to support their incomes face a £13 per month cut to their incomes (that’s based on the standard universal credit amount) once inflation is taken into account – on top of the removal of the £20 uplift in Universal Credit last autumn. The government’s decision to break the triple lock and increase the state pension by CPI rather than earnings will cost someone on the full new state pension £487 a year and someone on the full basic state pension £373 a year.

This is – as the Bank of England governor said this week - a ‘historic shock’ to living standards. When the Chancellor stood up last week to deliver his spring statement, families across the country were expecting him to use the power of government to help them manage it. That’s what government is for – to help us collectively manage challenges. Many had hoped that the experience of the pandemic – when government chose to step in to save jobs through the furlough scheme, and chose to support families with a welcome if inadequate £20 to boost to Universal Credit – would have reminded us of what we can do. The new annual DWP Households below average income (HBAI) data suggests (although there are some issues with the data) both relative and absolute poverty fell in 2020-21, as families were given the support they need to get by.

But the spring statement was woefully inadequate to the scale of the challenge. We had a tiny sticking plaster approach with a six-month extension to the household emergency support fund delivered through local authorities, which was set to close at the end of March. If the experience of the self-isolation support scheme is anything to go by, good luck getting hold of that. The Chancellor refused all calls to give a decent boost to benefits or pensions. He did nothing to add to the inadequate support he came forward with in February in the form of a buy-now pay-later energy bill rebate, and a £150 council tax discount that will barely touch the sides of the increase in energy bills. The Resolution Foundation said that the net result was to leave 1.3 million facing absolute poverty – including 500,000 children.

We don’t think it’s good enough. Families deserve better. That’s why we’re calling for the Chancellor to come back to parliament and put it right in an emergency budget. He should start by putting in place a hike to the minimum wage - £10 an hour should be just a start. He should give a real boost to Universal Credit and benefits – we’ve called for benefits to be increased to 80 per cent of the real living wage. And he should use a windfall tax on energy profits to fund grants – not loans – to specifically help with the cost of energy. Public services and energy intensive industries need more help too.

The crisis families are facing isn’t inevitable. It’s time for the Chancellor to step up.

Sign petition to demand action from Rishi Sunak

Rishi Sunak must come back to parliament and present an Emergency Budget. We need a proper package of economic support for families.

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