Chancellor of the Exchequer Jeremy Hunt prepares to leave 11 Downing Street to present his Budget to Parliament. Picture by Simon Dawson / No 10 Downing Street
Rishi Sunak’s government has unveiled its budget, formulated by chancellor Jeremy Hunt, to decide how it will spend its money to dig the country out of the cost of living crisis and get the economy growing.
There have been some high expectations on this budget, not least to make up for the widely-labelled “catastrophic” mini-budget from former PM Liz Truss in October. This left a £30bn fiscal hole amid a cost of living crisis which is having a bleak impact on the lives of millions of people across the country.
Labour leader Keir Starmer slammed the budget, pointing out the economic quagmire that 13 years of Conservative leadership have created, offering “always the sticking plaster, never the cure” which means “working people [are] made to pay for Tory choices and Tory mistakes”.
These are some of the Budget’s missed opportunities that campaigners will no doubt continue to fight for.
Jeremy Hunt’s “back-to-work” budget largely focuses on supporting older workers aged 50+ who have taken early retirement after the pandemic due to ill-health, caring responsibilities, redundancy or as a lifestyle choice, to rejoin the workforce.
But the Resolution Foundation has highlighted that many of those who took earlier retirement were higher-paid professionals who own their home so may lack a financial incentive to work.
There are actually more young people aged 16- to –24-year-olds who are unemployed but say they want to work (844,000), than there are older people (777,000) saying the same, according to analysis from the CIPD. Therefore, says the professional body for HR and people development, it makes sense to direct more support to young people’s careers.
Jon Boys, senior labour market economist for the CIPD, said a renewed focus on creating more flexible, high-quality and productive jobs across the economy would support all ages into work, while investment in careers advice services and boosting apprenticeship opportunities would particularly help young people.
“If we want a stronger economy, we need stronger public services,” Paul Nowak, general secretary of the Trades Union Congress, has previously said.
“Our public services need investment too, so that people are not kept out of work because they are on a long waiting list for NHS treatment, or because they cannot access the training they need,” he continued.
A guarantee to ensure people can afford the essentials
Universal credit claimants will be £140 short of the money needed to afford the essentials each month even after benefits increase in April, according to recent analysis from the Trussell Trust and Joseph Rowntree Foundation (JRF).
The Trussell Trust and JRF called for an “essentials guarantee” so that, at a minimum, universal credit is enough for people to afford the basics needed to live.
Even after the benefits are increased, a single person on universal credit is £35 out of pocket each week. A couple is £66 short. A person under 25 currently is £53 short.
This guarantee would require the government to review the level each year. Universal credit would currently need to be at least £120 a week for a single adult and £200 for a couple, according to the analysis. Really, the charities say universal credit should be set above this level. Otherwise any deduction (such as debt deductions or the benefit cap) leave people unable to afford the essentials once again.
This policy would benefit 8.8 million low-income families, including 3.3 million families with children. Three in five of the families who would gain from it are currently in work, so it would help alleviate in-work poverty.
The essentials guarantee policy would cost the government an estimated £22 billion but the charities say it would mean huge savings for public services because of the devastating impact people going without essentials has on the country’s economy. The government has not taken note of this and benefits will simply rise by 10.1 per cent.
An expansion to the free school meals scheme
Campaigners have consistently said the government is not doing enough to expand the free school meals scheme. Food charities and organisations including the Food Foundation, Chefs in Schools and School Food Matters launched a joint campaign in September calling on the government to urgently extend eligibility to all children from families in receipt of universal credit. This would feed an estimated 800,000 children.
Analysis from the Impact for Urban Health and PwC found that this expansion of the free school meals scheme would produce £8.9billion for the economy in core benefits, helping with savings in schools, increased lifetime earnings and contributions, increased savings on food costs for families and savings for the NHS.
A further £16.3bn of indirect benefits could come through wider economic and supply chain gains, such as growing the school food economy through expansion of school catering employment opportunities, resulting in £25.2bn total potential benefits.
Zarah Sultana, the Labour MP for Coventry South, went further and is calling on the government to provide more meals to every child in primary school. She said this “would ease the pressure for every family, and help ensure every child has the basics to learn, grow and thrive”. There was no mention of free school meals in the Spring Budget.
Retrofitting insulation in energy inefficient homes
Well-insulated homes can reduce energy costs and cut emissions from heating. But, many homes in England and Wales are poorly insulated and therefore contribute more to greenhouse gas emissions, as well as leading to higher energy bills.
According to analysis from the Local Government Association, poorer households are paying an extra £250 per year on their energy bills due to poorly insulated walls, roofs, and windows.
Homes in England and Wales have an average energy efficiency rating of band D, which means there is room for improvement, data from the Office of National Statistics found. Band C and above is considered to be the most efficient, both in terms of cost and emissions.
A report by the Environmental Audit Committee (EAC) published in January said that a “national war effort” was needed to “fix our leaky housing stock”. The report found that not enough was being done to “accelerate energy efficiency measures” even after Hunt promised £6bn in funding from 2025 onwards to insulate homes.
The EAC said that “those in fuel poverty now cannot afford three winters of delay” and recommended that the government bring the funding forward and spend it now.
Though Hunt’s spring budget includes measures to subsidise energy bills and help households with the cost-of-living, investment in insulation would bring down energy bills and emissions in both the short and long term.
Investment in onshore and offshore renewable energy
Hunt has committed £1bn a year for the next two decades to carbon capture technology, which would prevent emissions from being released into the atmosphere.
It involves taking carbon dioxide emissions from industrial activity such as steel and cement production, transporting it, and then storing it underground.
Calling it a “clean energy reset”, Hunt said this would create 50,000 green jobs and would capture 20-30 million tonnes of carbon dioxide every year by 2030 – the equivalent of emissions from 10-15 million cars.
But, the budget does not include any investment to help develop renewable energy, such as wind and solar, despite advisers from the government’s Climate Change Committee predicting that 70 per cent of electricity in the UK will come from solar and wind farms by 2035.
Renewable energy can provide energy security for the UK as well as reducing the country’s reliance on fossil fuels for energy production, which comes with high energy bills and greenhouse gas emissions.
Hunt has also promised further investment in nuclear power under the umbrella of Great British Nuclear, which is not considered renewable as uranium, from which most nuclear energy is generated, is a finite resource – but Hunt said, subject to consultation, nuclear power will be classed as “environmentally sustainable”.
Additionally, nuclear power plants come with risk, as it produces toxic waste that needs to be disposed of carefully to avoid contamination of the environment or harm to people.
Polling commissioned by climate charity Possible and conducted by Omnisis shows 58 per cent of people who are intending to vote Conservative at the next election want to see more investment in renewable energy to bring down the cost of bills, but this has not been reflected in the budget.
Hunt said that increasing nuclear capacity is “vital” as the “wind doesn’t always blow” and the “sun doesn’t always shine” in the UK.
More funding to tackle homelessness and rough sleeping
The chancellor also did not announce more funding to tackle homelessness and rough sleeping.
The government announced a £2billion spend over three years back in 2021, amounting to £640m a year.
This has not been uprated as inflation has risen and Homeless Link has warned that nearly half of the frontline organisations it represents are at risk of closing services if budgets remain the same.
The issue leaves the government at real risk of failing to deliver on its promise to end rough sleeping in England by the end of next year after last month’s official snapshot showed the biggest rise in numbers since 2015.
Support for low-income tenants dealing with record-high rents
Hunt did not answer widespread calls to raise local housing allowance (LHA) to help tenants keep up with record-high private rents.
LHA, which helps people receiving benefits to afford the cheapest 30 per cent of housing in their area, has been frozen since 2020 despite steep rises in housing costs and the cost of living ever since.
Last year analysis from Crisis and Zoopla revealed renters receiving housing benefit could only afford 12 per cent of listed rental properties in England.
Similar research from the Bevan Foundation this month found 1.2 per cent of properties advertised for rent in Wales in February were affordable for people receiving LHA.
Think tank New Economics Foundation predicted that unfreezing LHA would boost the incomes of 1.8 million households by £520 a year on average.
But failure to raise LHA will lead to more people struggling to find a place to live and keeping up with rent, housing and anti-poverty charities and frontline homelessness organisations have warned.
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