MPs Will Grill Rishi Sunak On Whether He’s Made The Right Call With Cost Of Living Crisis
Rishi Sunak will have to face MPs on the Treasury Select Committee this week on his Spring Statement (Alamy)
Rishi Sunak has ended this week with serious dents in his carefully polished personal brand after a series of punishing headlines questioned whether his Spring Statement offered enough support to households grappling with the cost of living crisis.
But next week is looking unlikely to offer much respite to the Chancellor, who on Monday will face the Treasury Select Committee to explain his decision not to “solve every problem”, and ease pressures on households caused by rocketing inflation and soaring energy bills, or enhance Universal Credit payments.
Conservative MP Mel Stride, chair of the powerful cross-party group of MPs, told PoliticsHome he will be grilling Sunak over whether measures announced this week, including a 5p cut in fuel duty, and increasing the threshold when people start paying National Insurance, successfully balanced the government’s books without putting the most vulnerable at risk.
“Did he get the call right?” Stride asked.
“If you're not in work and you are on UC [Universal Credit], there's really as far as I can see very little in this,” he continued.
“That's certainly an area where we will be pushing quite hard and listening to what he has to say.”
Energy prices will already rise significantly when we move into April this week, and will be exacerbated further by Russia’s invasion of Ukraine.
Stride notes the impact of the Ukraine crisis has not yet been taken into account in the Office for Budget Responsibility’s already bracing projection of increased inflation and reduced growth.
He believes this could be why Sunak has not yet gone further on energy support, instead waiting to see just how severely Putin’s aggression impacts wholesale prices long-term.
Already there are predictions that the energy price cap could be raised to as much as £3,000 in October, sending bills soaring even higher.
“It does seem to me that we're in a very uncertain world,” Stride said. “I mean, poor old Rishi has been in this now for two years, first the pandemic, now the Ukraine situation.”
He felt that Sunak has “a lot riding on the future”, if he hopes to ease pressures later on and reduce the controversial rise to National Insurance intended to tackle the post-Covid NHS backlog.
“Of course he's also now costed in these income tax cuts from 2024 onwards as well,” he said.
Stride is keen to establish whether Sunak could have used the increased fiscal headroom afforded to the treasury now from recent changes made to inheritance tax, capital gains and VAT “to make life more comfortable for lower income households, as opposed to hanging on to it as a hedge against the problems that the economy may face in the future.”
He added: “[Sunak] splashed some of the cash, he's kept some of it in reserve. The big question is has he got that balance right?”
Sunak initially seemed pleased with how the Spring Statement had gone down on Wednesday, posing for a petrol station photo-op filling up a supermarket staff member’s car to hammer home the cut to fuel duty, before telling a briefing room full of Tory MPs that it had been a “good day”.
But it is clear the statement has not landed in the way he would have wanted, with a number of Conservative backbenchers going on record to call for more support for cash-strapped households.
Veteran MP Richard Drax told the House of Commons on Thursday that Sunak’s “tinkering” with public finances may not be enough to penetrate “deep pockets of deprivation and poverty” in the UK, while fellow Conservative Peter Aldous lamented in an editorial for The House that there was no “targeted support for the most vulnerable”.
Insiders told PoliticsHome “the prevailing word on the street” is Sunak “didn’t go far enough”.
The Chancellor has repeatedly defended his record, pointing to the £9billion of support he has already outlined to tackle the cost of living crisis, on top of hundreds of billions worth of unprecedented public spending to deal with the pandemic.
Sunak’s defenders suggest he has faced tougher circumstances than anyone else in his position has ever had to, moving from crisis to crisis – first with Covid, and now Russia – over his two years in Number 11.
Stride said he did feel “terribly sorry” for Sunak. “Boy, has he had a difficult hand dealt to him,” he added.
Labour has been less generous in their assessment of why Sunak might be holding back on spending now, with Rachel Reeves accusing him of keeping cash in reserve to allow for vote-winning tax cuts ahead of the next election.
"He's thinking of the next election, and he's thinking of the next leadership election in his party,” Reeves told PoliticsHome.
"His policies are geared around that rather than what's in the national interest. So he says he wants to cut taxes, but he is not cutting taxes now, when people need help and need more of their money in their pockets.
"He says 'we'll cut them in 2024', wow what a convenient date that is, because that will be just ahead of the next election.”
By not using all of the spending headroom he has right now, Sunak has left himself fiscal flexibility to build political capital, or to tackle whatever crisis comes down the track next.
But the feeling in Westminster is that he is going to be forced into using it sooner rather than later.
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