BASW UK response to Spring Statement

The statement was little more than moving money around, while failing to make the big decisions to tackle the cost-of-living crisis.

Ahead of the Chancellor’s Spring Statement, BASW UK was looking for tangible announcements that would make a real difference to people on the lowest incomes and those living on social security benefits. When the Chancellor finished his statement and sat down, it became clear that the statement was little more than moving money around, while failing to make the big decisions to tackle the cost-of-living crisis.

The key announcements in the Chancellor’s statement, were:

  • Fuel duty will be cut by 5p per litre until March 2023, coming into effect at 6pm today.
  • Doubling the household support fund with an extra £500m. Local authorities will receive funding from April 2022.
  • The Health and Care levy will remain in place.
  • National Insurance contribution thresholds will increase by £3,000 from this July. You will be able to earn £12,570 without paying any National Insurance or Income Tax. 
  • From April the Employment Allowance will increase to £5,000
  • Before end of this Parliament in 2024, the basic rate of income tax will be cut from 20p to 19p. 

A cut in fuel duty is welcome, along with investment into the Household Support Fund. Local authorities are often well-placed to support people in their communities. But £500m spread out across all authorities will not go far and does not make up for inadequate local government funding.

An increase in the threshold before you start paying National Insurance Contributions will make a difference to people, but this will result in less money being put back into health and social care. This raises questions about the levy, and why that couldn’t have been scrapped or lowered instead and a fairer form of taxation introduced such as higher incomes and earnings from sources such as investments, large portfolio rental income and power company windfalls.

The proposed changes to tax rates instead relieve high earners of contributions, which seems regressive at a time when the highest earners should still be paying their share as they can afford to. People with higher incomes are less likely to feel the pinch from the increasing cost of living.

The Chancellor’s statement moves money around on taxes but fails to address the increasing cost of living for those who are out of work or unable to work. There were no changes to Universal Credit or legacy benefits

Speaking in response to the Chancellor’s statement, BASW UK Chief Executive Ruth Allen said:

“The Chancellor’s announcements will make some difference to the immediate cost of living crisis for those who are in work and paying income tax and national insurance contributions, but it simply does not go far enough. It is regressive in leaving the main tax burden – in a time of soaring inflation – on low and middle earners and benefiting the most well off It also adjusts the NI hike to pay for health and social care investment, potentially reducing the pot available for that which ploughing on with the levy which will still fall disproportionately on low and middle earners.

“The Chancellor made no announcement about how to tackle the immediate cost-of-living crisis for those on who are on Universal Credit or legacy benefits. There appears to be no compassion or understanding about the depth of poverty right now for many people in our unequal society.  Inequality across society harms everyone, as research shows, and is a policy choice not an economic necessity in the 6th largest economy – and one of the most unequal – in the world. He has recognised to some extent the squeeze that many people in work are feeling but has not provided any solutions for fellow citizens who are not in work or cannot work.

“Social workers see first-hand the impact that poverty has on the people we work with, and we know that these announcements do not go far enough. The Chancellor has failed to advance his own purported test of ‘levelling up’.

BASW will provide a further update on the Spring Statement with more analysis including country-level implications.