Cost-of-living package will fail as we've let our benefit system decline

Olivia Miller
Consumerism by Steven Tattersall }

As the Chancellor Rishi Sunak announces a new package to support people struggling with the cost of living, Professor Peter Taylor-Gooby, a social policy expert in the School of Social Policy, Sociology and Social Research (SSPSSR), said:

‘Rishi Sunak’s £200 per household to help with the cost-of-living crisis is too little too late. Fuel prices are set to almost double for many people to some £2,800 a year by the winter. Food prices and the cost of anything that involves transport will rise faster than incomes.

‘The government is providing a £400 payment for each household in two instalments, in addition to £150 for households in housing in council tax bands A to D. All households on means-tested benefits such as Universal Credit will receive a £650 payment in two instalments (July and the autumn). Pensioner households will receive £300 extra this winter and disabled households will receive £150. The local authority-managed Household Support Fund will receive another £500 million.

‘This looks like a lot of money and it is – something like £37 billion in all this year. It must be seen in a context where government cut Universal Credit by £20 a head last October, so that the benefit is at the lowest it has been since 1991. Benefit uprating currently runs at about a third of inflation and wage increases for the bottom half of earners at about half. The Joseph Rowntree Foundation estimate that something like a third of children live in poverty.

‘The complexity of the support schemes makes it hard to calculate exactly how these changes will affect individual households. If they are lucky the poorest households will receive roughly enough by the end of the year to make up for the £20 a head they lost last October. Some will get rather more money, which can begin to chip away at the inflation mountain they face. Only the poorest third of pensioners – those on means-tested pension credit to top up their pension will receive a substantial slice towards higher fuel costs, perhaps half of the increase they face. For most people the £400 extra will not even compensate for the impact of inflation on their earnings, let alone start to help with the extra they are paying for fuel.

‘Britain has the largest proportion of its population in poverty of any western European country. The whole benefit system has been cut back repeatedly for the past dozen years. The challenge of meeting extra needs such as the cost-of-living crisis is colossal because we set out from such a low starting point. The package announced on Thursday will leave even more people falling into the most severe poverty.’

Peter Taylor-Gooby is Professor of Social Policy at SSPSSR. His main research interests are in current developments in the welfare state: cuts and welfare state restructuring, the social divisions association with inequality and the struggles over multiculturalism.

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