Households will be £2,620 worse off this year even after Rishi Sunak’s ‘tax cuts’ says Keir Starmer as he launches Labour’s local elections campaign
- Keir Starmer is launching Labour’s local election campaign at an event in Bury
- The party says households will be £2,620 worse off this year after tax increases
- Energy prices, fuel and higher food costs also add to the pain over 2022-23
Keir Starmer is stepping up his attack on the cost-of-living crisis as he launches Labour’s election campaign warning that households face a £2,620 squeeze this year.
At an event in Bury, Sir Keir will highlight the huge hit in the pipeline as he condemns the government for failing to provide enough help.
The party’s figures show the average tax bill is set to rise £1,060 over the next 12 months, with the controversial national insurance rise taking effect in the coming days.
Meanwhile, energy prices add £690, fuel £300 and higher food costs £275 – with the Bank of England raising interest rates leaving the average family another £295 worse off.
Despite much of the added expense being down to spiking inflation caused by global factors, Sir Keir will say that Labour would have acted to impose a windfall tax on oil and gas firms in order to cut bills by up to £600.
Thousands of council seats and mayoralties across the UK are up for grabs on May 5, with Tories nervous about fallout from soaring prices and Partygate.
The Labour launch comes after Boris Johnson yesterday defended the level of help doled out by Rishi Sunak in the mini-Budget last week.
Keir Starmer (right) will highlight the huge hit in the pipeline as he condemns Rishi Sunak (left) for failing to provide enough help
The Labour launch comes after Boris Johnson yesterday (pictured) defended the level of help doled out by Mr Sunak in the mini-Budget last week
He dismissed criticism of the decision not to uprate Universal Credit more quickly to help people to pay their rising energy bills.
The PM told the Commons Liaison Committee that the aim was to get people into work but denied that he had lost confidence in the benefits system, saying: ‘I know how tough it is for people to meet the cost of energy and I think you’re raising a very reasonable point.
‘And you have to decide where you’re going to put your fiscal firepower given that we don’t want to put up taxes and we don’t want to borrow any more, so what are you going to prioritise and who are you going to make sure you target in order to have the maximum economic benefit for the whole country?
‘What we think very strongly is you’re better off helping people into work.’
Labour’s research suggests families are on track to be £2,620 worse off – even after the Chancellor’s spring statement.
Sir Keir will say: ‘Britain deserves better than the pathetic response we got to the Conservative cost of living crisis in the mini-Budget.
‘You know the reality – prices are going through the roof, and wages are going through the floor.’
He will claim the Conservatives have overseen ‘the biggest drop in living standards since the 50s’ and the highest taxes in 70 years.
‘Even allowing for everything the Chancellor announced, families are £2,620 worse off. Britain deserves better than this,’ he will say.
‘Working families feel more insecure than ever. While prices are rising in the supermarkets, at the petrol pumps and in our electricity bills, the Government has chosen to put up national insurance at exactly the wrong time.
‘That’s why Labour would tackle the Tory cost-of-living crisis by cutting your bills by up to £600 funded by a windfall levy on the excess profits of the oil and gas companies.’
Senior economists told the Treasury Select Committee yesterday that measures announced by the Chancellor Rishi Sunak last week will leave the poorest, out-of-work households the worst-off group from his support packages.
Mr Sunak is facing criticism for failing to do enough to tackle the cost-of-living crisis, with the state pension set to fall in real terms after the triple lock was suspended
An Opinium poll at the weekend found Rishi Sunak, once one of the most popular members of the government, has seen his ratings tumble into negative territory for the first time
Earlier, Torsten Bell, chief executive of the Resolution Foundation think tank, said: ‘I was very surprised that the Chancellor had chosen the overall package he had when it came to what was on offer for lower-income households.’
He pointed out that lower-income households will feel the pressure from rising energy bills – which is driving inflation.
The economist added: ‘It is an odd choice to have offered basically next to nothing to those households in this spring statement.
‘I didn’t think he would do that and I was wrong.’
The Resolution Foundation has calculated that the cost of living crisis will push 1.3 million households into absolute poverty.
Middle-income households can expect to see disposable income fall 4% next year after housing costs.
For those in the poorest quarter, income falls 6%, and for out-of-work households it falls by 8 per cent, it said.
Mr Bell added: ‘The surprise is he didn’t try to do anything to reduce the increase in absolute poverty.
‘The Chancellor has consistently gone out of his way to concentrate support for those in work.
‘The blindingly obvious answer is you need to uprate benefits in April by more than we are doing, so that the level of the real terms cut over the course of this particular year isn’t huge.’
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said there were mechanisms available to uprate benefits.
He told MPs: ‘These are really big falls in the real living standards for households that are budgeting over relatively short periods of time.
Gemma Tetlow, chief economist at the Institute for Government (IfG), said all groups will feel the pain of the cost-of-living crisis, but higher income households will be better protected because they managed to save money during the pandemic.
A Treasury spokesman said: ‘We understand that people are struggling with the rising cost of living – we can’t shield everyone from the global challenges we face but we’re putting billions of pounds back into the pockets of hard-working families across the UK.
‘We’ve taken action worth over £22billion next financial year to help with the cost of living including a 5p cut to fuel duty for the next 12 months, increases to national insurance thresholds that will save a typical worker £330 per year, and an extra £500 million for the Household Support Fund to help those most in need.
‘We’re also helping low-income families keep more of what they earn by reducing the Universal Credit taper rate, boosting incomes by £1,000 per average full-time worker by increasing the national living wage and providing over £9billion to help with rising energy bills.’
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