UK Budget Assessments
WBG Full Response to the Spring Statement 2022
Date Posted: Thursday 24th March 2022
WBG’s full response to the Spring Statement 2022
24 March 2022 – gendered analysis
This year’s Spring Statement took place against the background of a rapidly growing cost of living crisis. The Office for Budget Responsibility (OBR) is forecasting that inflation will reach a high of 8.7% in the fourth quarter of 2022 – its highest rate for 40 years. This crisis will disproportionately impact the poorest people in the UK, and women in particular since they have lower levels of savings, are more likely to be in debt and spend a higher proportion of their expenditure on essential goods.
In this context the Chancellor’s response was extremely disappointing and fell far below what was needed to provide support to those who need it most. This is not just a crisis of rising prices, it is also a crisis of incomes. Over a decade of austerity policies, low wage rises and cuts to social security have left many people in poverty. While the richest households saved money during the pandemic, the poorest fell further into debt, with no cushion to cope with rising prices now.
The most effective way to provide support to low and middle earners would have been to increase the level of social security payments. Instead the Chancellor chose to target support on the better off through tax cuts, with further cuts promised in 2024.
Rising inflation will also reduce the value of the cash settlements announced for Government departments in the autumn 2021 Spending Review. The IFS has calculated that this means public spending will be more than 10% less than planned, with the NHS England Budget set to grow by 3.6% rather than the 4.1% planned in October and the schools budget down from 2.2% to 1.7%. The Chancellor did not announce any additional spending to make up for this shortfall.
In many ways this Spring Statement marked a return to the priorities of austerity budgets since 2010. 2021 saw an increase in tax and plans to put real terms spending per head back up to 2009/10 levels by 2024. This year the Chancellor made the decision to allow public spending and social security to fall in real terms and made it clear that his priority was further cuts to taxes. It was this combination of tax cuts and cuts to spending since 2010 that left the UK economy in a weakened position to respond to the Covid 19 pandemic and left women, particularly poor, disabled and Black and minority ethnic women, more vulnerable to poverty now.