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Tory MP Says Rishi Sunak's Spring Statement Will Have "Negligible Impact" On Most Vulnerable

Household finances are set to face an unprecedented squeeze

5 min read

The warning comes as the UK's fiscal watchdog said standards of living are still set to plummet despite Rishi Sunak's latest measures.

Tory MP Peter Aldous has criticised the Chancellor for failing to "get ahead of the curve" in helping people on low incomes.

It comes after Sunak defended the actions he took in his Spring Statement despite warnings the UK is still facing an "unprecedented" drop in living standards.

Sunak used the fiscal set piece to deliver a 5p change in fuel duty, and a change in the national insurance threshold which the Treasury claimed would save the average worker around £330 a year.

But writing for The House, Aldous said while the measures would go "some way to alleviating the crisis for many families", they would have a "negligible impact" on the most vulnerable.

"The effects of this could imperil the livelihoods of those who are a long way from the workplace, face complicated circumstances and, for a variety of reasons, cannot simply work their way out of poverty," he wrote.

And the Waveney MP said he "sympathised" with the Chancellor's ambition to cut taxes, he said the proposed reduction of income tax by 2024 would cost the Treasury around £5bn which was around the same amount required to retain the £20 uplift in Universal Credit which was cut earlier this year.

"I called for this when the uplift was withdrawn last September and continue to believe that the government made a strategic mistake in doing this," Aldous added.

"Having not remedied this mistake in his Statement, I fear that the Chancellor has now doubled down on it.

"With the economy in a state of near full employment, we must recognise the prevailing attitude that “more work is always the answer” cannot spare everyone the potential destitution some now face.

"The government would do well to be mindful of this in the months ahead."

Speaking to the BBC on Thursday, Richard Hughes, chairman of the Office for Budget Responsibility (OBR) said the changes announced by Sunak would not reverse an expected drop in living standards.

"In total, they amount to about an £18bn giveaway in this Spring Statement coming from the Chancellor," he said.

"That offsets around a third of the overall hit to living standards that people would otherwise have felt had he not taken those measures, so without the Chancellor taking action, people would have felt a 3% fall in their living standards in the coming 12 months.

"That reduces it down to around 2%, but it's still an unprecedented fall in people's standard of living over the next 12 months."

According to analysis from the OBR, disposable household incomes are expected to drop by 2.2% this year, the largest fall in a financial year since records began in 1956.

Responding to the claims, Sunak said he understood the pressure on families facing the impacts of soaring fuel costs and rising inflation, saying that was why he "announced a tax plan which delivers the biggest net cut in personal taxes in over a quarter of a century."

Speaking to Sky News, he said: "I'm cutting fuel duty at 5p a litre, raising national insurance thresholds, giving 30 million workers a tax saving of £300 and cutting income tax for the first time."

But pressed on whether the steps went far enough to reduce the pressure on household budgets, he added: "I can't solve every problem and I've always been honest about that and where I can make a difference, of course, I want to and I think the plan I announced yesterday will do exactly that and support hard-working British families."

And the Chancellor faced criticism during an LBC radio phone-in on Wednesday evening when he was confronted by a single mother who said despite working two jobs the current surge in prices were putting an "intense strain" on her finances.

Hzul told Sunak his measures weren't "going to cut it," as she said she could not afford to pay her energy bills and was forced to sometimes go without food so her children could eat. Sunak said he could not "imagine how difficult" her situation was.

But pressed on whether he understood the situation for people on low incomes, he added: "I'm sitting here in this job as the product of a lot of sacrifice and a lot of kindness from a lot of people in my life.

"I work day and night to spread those opportunities to make sure as many people as possibly have those same types of opportunities. I'm making sure that I'm on people's side and I'd say judge me by my actions."

But Liberal Democrat leader Ed Davey said the announcements were a "total swindle" as he warned people were "drowning" in high taxes.

"He's giving a bit and taking a lot," he told the BBC. "And if you look at the fine print that was published yesterday, it shows taxes overall going up by over £1,500 a year per household under this Conservative government."

"And those tax rises from Conservatives are coming at the worst possible time - the squeeze on families and pensioners, again, set to be the worst for over 40 years, pump rises, food bills, energy bills, inflation the highest for over 40 years."

He added: "People are drowning in these tax rises and these higher bills. The Chancellor needed to provide a lifeboat for people and he didn't."

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