How Rishi Sunak forgot the ‘bread and butter’ basics of living standards in Spring Statement – Bill Carmichael

Spring Statement: Slump in living standards to reach post-war low as Rishi Sunak banks on short-term pain for long-term gain – The Yorkshire Post says

The result is skyrocketing energy prices, which, combined with inflation expected to rise above eight per cent this year, and swingeing tax increases, has led to what the independent Office of Budget Responsibility says is the worst squeeze on living standards since records began in the 1950s.

Put bluntly, we are all going to be a lot poorer this coming year, and the least well off, who spend more of their income on heating and food, will be particularly hard hit.

This week Mr Sunak had the opportunity in his Spring Statement to explain exactly how the government is going to help ordinary citizens survive what is sure to be an incredibly difficult period.

So how did he do?

Before we get into the detail of the measures announced to the House of Commons this week, it is worth reminding ourselves briefly of Mr Sunak’s rapid rise from the son of immigrant parents to hold one of the great offices of state.

Born in Southampton to parents of Indian heritage, who emigrated to the UK from East Africa, Mr Sunak attended Winchester public school before gaining a First Class Honours degree in Philosophy, Politics and Economics at Oxford and then going on to study for an MBA at Stanford University in the United States.

During this period he had the good fortune to marry the daughter of an Indian billionaire, one of the richest men in the world, before working for the investment bank, Goldman Sachs.

He was adopted as the Conservative candidate for the constituency of Richmond in North Yorkshire, former Conservative leader William Hague’s old seat, and entered Parliament after the 2015 General Election.

Clearly talented and ambitious, he was quickly identified as a rising star of the new intake of MPs, and in 2019 he became Chief Secretary to the Treasury, before being appointed Chancellor in 2020 by Prime Minister Boris Johnson, less than five years after becoming an MP.

Such was Sunak’s surefooted response to the Covid pandemic – announcing support for businesses and the hospitality industry – that he was frequently talked up as a possible replacement for Mr Johnson, should the Prime Minister be forced to resign during the ‘partygate’ scandal.

But Mr Sunak’s decision to impose big increases in National Insurance rates – effectively a tax on jobs – dented his reputation as a low tax Chancellor with the Conservative rank and file.

This week’s Spring Statement was his opportunity to restore a little of a somewhat tarnished image.

And true to expectations he did announce some tax cuts, most notably to National Insurance.

He did this by increasing the threshold at which NI is paid, while at the same time sticking with his earlier decision to put up the actual rate

The result seems little more than a clever conjuring trick – giving us money with one hand, while taking it away with another. Other headlines included a welcome 5p per litre cut in fuel duty and a 1p cut in income tax from 20p to 19p in the pound, but not until 2024, which by an amazing confidence is likely to be a general election year!

Will this be enough?

The scale of the financial crisis facing many households suggests not. I suspect Mr Sunak and his team have still not grasped how bad things are going to get.

Many people, not just the very poor, are going to find it incredibly difficult to make ends meet in coming months, and Mr Sunak’s limited measures, though welcome, are unlikely to solve matters.

And don’t forget – he is still far more of a tax-raising Chancellor than a tax-cutting one, and he still can’t find any money to help poorer pensioners and those on benefits.

Promising us a little bit of jam in 2024 is not much comfort if you can’t afford to buy bread today.

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