SCOTLAND’S finance secretary has warned Rishi Sunak not to “duck the considerable challenges” of the cost of living crisis, calling on the UK ministers to match an increase in benefits north of the Border.
The Chancellor is under growing pressure to address soaring household costs in his “mini-budget” on Wednesday, with warnings people are being pushed to the brink.
In a letter to Sunak ahead of the Spring Statement, Kate Forbes has called for Tory ministers to follow the lead of the Scottish Government, which has increased eight devolved benefits by 6% rather than the planned 3.1%.
She also urged the UK Government to revise the decision to withdraw the Universal Credit uplift of £20 a week and for further payments to be made to low-income households through the Cold Weather Payment.
In her letter, Forbes said: “There are acute challenges currently facing households, public services and the economy as a whole, ranging from the continuing pandemic to the cost-of-living crisis to the implications of Russia’s illegal invasion of Ukraine.
“It is not a time for government to be ducking the considerable challenges we face, and I trust you will take the opportunity of your fiscal statement to take the significant action needed to support citizens, considering that most of the relevant levers are reserved to the UK Government.”
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The Chancellor will make his Spring Statement to the House of Commons on Wednesday, an update on the health of the economy which does not usually include major tax or spending changes.
Speaking at an event at the Tory party spring conference in Blackpool on Friday, he said the Government would help the public “where we can” with soaring energy bills and rocketing prices at the petrol pumps, but added that the Government cannot “solve every problem”.
Anti-poverty campaigners from across the UK have sent a joint letter to Sunak ahead of the Spring Statement calling for him to scrap the “unjust” benefits cap, which limits the total that households can receive.
Poverty Alliance director Peter Kelly said: “The benefit cap cuts the lifeline that people need and are entitled to, just at a time when more and more households are being caught up in a rising tide of living costs.
“He should also reverse the £20 cut to Universal Credit, to help us move towards a just social security system that actually meets people’s needs.”
Last week the Joseph Rowntree Foundation issued new research which shows £1 in every £5 from low-income family budgets could go on energy costs this year.
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It also found single adults on low incomes could end up spending a shocking 49% of their incomes just on energy costs.
Chris Birt, associate director (Scotland) at the Joseph Rowntree Foundation, said: “The social security system was inadequate before the pandemic and this spike in prices, but the Chancellor is compounding this fact by failing to match benefit rises in April with the actual cost of living. “This will force households to cut back on essentials like food and energy and increase the prevalence of debt, hunger and anxiety.”
Reports have suggested one measure Sunak is looking at is a cut in fuel duty – despite concerns this will fail to help the poorest households.
Heather Self, tax partner at business advisory firm Blick Rothenberg, said he was unlikely to reverse the rise in NI contributions planned for April 6 at this late stage, but he could take action on VAT.
She added: “I think he is going to have to do something for those who are really struggling and he has some cash available in terms of the extra VAT he is collecting.
“But I can’t see him doing anything that really does enough for what most people feel they want at the moment.
“I don’t think he is going to be as popular after the Spring Statement as he is before.”
Last week, the Institute for Fiscal Studies reported Sunak had announced more tax rises in two years than Gordon Brown did in a decade.
Alison Thewliss MP, the SNP’s Shadow Chancellor, said the Tory cost of living crisis had been a decade in the making, with rising costs compounded by Westminster decisions over Tory austerity and Brexit.
She added: “Rishi Sunak must stop looking the other way and step up to the challenge that is pushing households to the brink.
“It is vital that he uses the upcoming Spring statement to deliver a comprehensive package of support that must include at the very minimum converting the pitiful £200 energy loan into a more generous grant, scrapping the regressive National Insurance tax hike, maintaining the 12.5% VAT rate for hospitality and tourism businesses, reversing the £1040 cuts to Universal Credit, matching the Scottish Child Payment UK-wide, and introducing a Real Living Wage to boost incomes.
Scottish Greens economy and social security spokesperson Maggie Chapman said: “In Scotland with Greens in government we are doing what we can to mitigate the worst impact, but let’s not forget in 2018 the UN called Tory cuts an ideological dismantling of the UK’s social security safety net, one which violated the Government’s human rights obligations.
“Recent decisions like the cutting of Universal Credit and the regressive National Insurance hike have continued this trend.
“This week the Chancellor has to reflect on the impact of this cruel government’s decisions and change tack, before millions more are plunged into poverty.”
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