The dust has settled after the emergency budget last week. Originally planned as a regular update on public finances, because of the last budget in October, public finances are in a worse position than expected.
To be clear, households are facing a bleak time. Council tax is up 5.1%, energy bills set for a 6% rise (making them 9% higher than a year ago), average rents are 8%, inflation at just under 4%. Average wages are up around 6%, but that includes some heroic pay awards for public sector workers last year, so most are not seeing that increase. Add to that no increase in personal allowances, and net pay is not keeping up with inflation.
The Chancellor has tried to find money and she has targeted the benefits system. It is a reasonable thing to look at. Personal Independence Payments (PIP) and other health benefits will cost this country around £97 billion by 2030, having risen by 40% since 2013. This is a massive increase, and it is widely recognised that the PIP scheme isn’t working as envisaged. With many people not working due to mental health issues, it is fair to try to get people back to work – in itself something that increases an individual’s self-esteem. But there doesn’t seem to be any plan, and they have scrapped the work capability assessment. More worryingly, as a direct result of Labour’s employment tax rises, the Office for Budget Responsibility (OBR), the government’s fiscal watchdog, has predicted unemployment will rise. So what hope for people who have been out of work for a long time and are seeking jobs? Under Labour’s own analysis, this policy will put 250,000 people – including 50,000 children – into poverty.
The Resolution Foundation, the Joseph Roundtree Foundation, the OBR – all sorts of commentators – are coming up with broadly the same story. Living standards are under threat from Labour. Lower income families are set to take the biggest hit.
It is no wonder that Labour MPs look so miserable. The more left wing end of the party are already voicing their dismay at what Labour is doing in government. But it seems there may be more preparing to rebel.
Tackling a ballooning welfare budget is a perfectly reasonable thing to do. Being responsible with tax payers’ money is the right thing to do. But combining policies that directly target jobs, coupled to a total absence of plans, does not add up to good government.