Chancellor defends his choice to not raise Universal Credit benefits

Richi Sunak delivers Spring Statement 2022

LONDON (Parliament Politics Magazine) – In his Spring Statement last week, Chancellor Rishi Sunak defended his decision of not increasing the benefits payments to help with rising living costs.

Mr Sunak, according to MPs, could have done more to help individuals on Universal Credit.

This year, rising living costs are expected to outpace projected benefit increases.

Mr Sunak, on the other hand, informed the MPs that he had announced targeted support to those who are most in need.

Mr Sunak defended his choice in front of the Treasury Committee on Monday, saying that tax cuts and energy bill assistance were among a series of “progressive” policies that would benefit low-wage workers the most.

In April, benefits and the state pension will increase by 3.1 percent, significantly behind the rising cost of living, known as inflation.

Conservative MP Mel Stride, the committee’s chairman, questioned the chancellor whether his Spring Statement gave individuals on benefits reason for hope.

“There’s a huge amount of spending going on,” Mr Sunak said, adding that “the vast majority of people” on benefits will benefit as a result.

When Mr Stride asked why he didn’t increase benefits sooner, Mr Sunak cited operational concerns and his unwillingness to increase the borrowings of the government.

Mr Sunak stated that his responsibility was to make the correct long-term decisions.  Excessive borrowing now, in his opinion, was not the appropriate thing to do.

A political choice

Labour MP Angela Eagle pressed Mr Sunak on benefits payments and an anticipated drop in living standards.

According to the Resolution Foundation, 1.3 million additional individuals will be driven into extreme poverty starting in April.

Meanwhile, the Office for Budget Responsibility (OBR) predicts a 2.2 percent reduction in living standards this year, the greatest drop since the 1950s.

However, for the poorest, that rise reaches to 6%, Ms Eagle explained. Why hadn’t he done more to assist people who were going to have a hard time with this, she asked.

She went on to say that he had made a political decision that would impoverish 1.3 million people, including half a million children.

Mr Sunak said that government actions would counteract around a third of the expected reduction in living standards.

He claimed that “global forces” were driving up costs and lowering living conditions.

Soaring energy prices, according to the OBR, could bring inflation to a 40-year high of 8.7% in the final three months of 2022.

That was why they would continue to monitor the situation and they were prepared to intervene if required, Mr Sunak said, adding that energy costs are extremely volatile.

In his Spring Statement on Wednesday, the chancellor attempted to address the increasing cost of living.

He slashed fuel duty by 5p and softened the blow of April’s National Insurance (NI) hike by raising the threshold for workers to begin paying it from £9,600 to £12,570 starting in July.

Opposition MPs have urged him to do more now to help people cope with rising food, petrol, and electricity prices.

His changes to NI fell short of Labour and some Tory MPs’ demands that he totally repeal the April increase.

Kourtney Spak

Kourtney Spak is an american journalist and political commentator. Her journalism career focuses on American domestic policy and also foreign affairs. She also writes on environment, climate change and economy.