LONDON (AP) — Britain’s treasury chief is defending his spending priorities after have critics attacked him for not doing enough to help families struggling with the biggest cut in living standards on record.
Chancellor Rishi Sunak said Thursday that he understood families were struggling with rising prices but his options were limited because he is focused on shoring up government finances after the COVID-19 pandemic. At the same time, the government is increasing spending on health care, law enforcement and schools, he said.
“I think most people will understand that an exceptional experience like (the pandemic) does lead to an exceptional response and that’s what we’re now grappling with,” Sunak told Sky News. “But also we are continuing to invest in public services … and that, of course, needs to be paid for.”
Sunak on Wednesday announced a package of measures to reduce the squeeze on consumers, including a cut in motor fuel taxes, more money for local government aid to low-income residents and raising the threshold at which workers begin to pay social insurance taxes.
But he failed to take bolder steps such as delaying a 1.5% income tax increase set to take effect in April or introduce a tax on windfall profits of energy companies benefiting from soaring oil and natural gas prices.
The new spending plans were announced as the independent Office for Budget Responsibility said inflation would reduce household disposable incomes by 2.2% this year, the biggest drop in living standards since records began in 1957.
The Resolution Foundation, a think tank focused on improving living standards, said the lack of support for low-income families could see 1.3 million people fall below the poverty line this year.
“The big picture is that Rishi Sunak has prioritized rebuilding his tax-cutting credentials over supporting the low- to middle-income households who will be hardest hit from the surging cost of living, while also leaving himself fiscal flexibility in the years ahead,” Chief Executive Torsten Bell said in a statement.
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