WBG’s response to the Chancellor’s cost-of-living support package

“Short-term relief, but no long-term solution”

26 May 2022, speaking in response to the Chancellor’s statement on the cost of living, WBG director Dr Mary-Ann Stephenson said today:

We welcome the Chancellor’s recognition that people need money in their pockets right now. At a time when food banks are struggling to cope with demand, these measures are long overdue. Had these been included in the Spring Statement, many households might have avoided being pushed into poverty. Some of the measures will help to alleviate the short-term sting of this cost-of-living scandal, but they fail to address the need for systemic change.

The targeted support for those on means-tested benefits is particularly welcome. This is a recognition of the vital role our social security system plays in acting as a safety net. We know that women are more likely to rely on social security for their income so they would have been hardest hit by the failure to uprate benefits. The £650 payment will provide some relief. However, we are concerned that the cut-off date to qualify for the first payment will mean that anyone making a claim from today onwards will not be eligible for this payment. A woman leaving an abusive relationship today and needing to claim benefits tomorrow or a worker losing her job in the coming days will not be eligible for this support.

The one-off payment will also be insufficient for larger families with children, who are facing increasing costs with food and energy but no additional support compared to single people or couples with no children. If the Treasury fails to address these issues, we could see people, in their most vulnerable moments, left behind.

The additional support for disabled people is particularly welcome and is recognition of their higher daily costs, as is the extension of support to people on legacy benefits and the decision that these lump sum payments will not count towards the benefit cap. There is also some reassurance in the Chancellor’s commitment to maintain the uprating of benefits next year in line with this September’s inflation rate.

Benefit levels in the UK have been systematically eroded over the past 12 years, through a series of cuts and freezes, and have contributed to the crisis of incomes that we are now seeing. We need a long-term settlement that ensures that everyone receives support when they need it most – if they lose a job, become ill or disabled or have to leave an abusive relationship.

Supporting people right now is crucial but we also need action to tackle the systems that led us to this point. This includes investment in a major programme of insulation of British homes during the summer which would help with energy bills, something that is also vital in tackling climate change. The Government must also prioritise investment in physical and social infrastructure such as social housing and childcare. Rent and childcare fees are essential bills for most families, yet costs have spiralled over the last decade. Childcare fees have risen at twice the rate of wages for the past ten years, leaving parents in debt and mothers unable to start or increase their hours of paid work, increasing their financial vulnerability.

Like many other organisations, WBG has made repeated calls for a windfall tax, so we are particularly pleased to see the Chancellor introduce the energy profit levy. This alongside the conversion of the energy bill loan to a grant are positive steps. However we are concerned that companies making excess profits will be able to avoid this windfall tax if they invest in UK extraction of oil and gas. At a time when we need to be reducing use of fossil fuels, this new ‘super-deduction’ undermines efforts to tackle the climate emergency.

A more ambitious windfall tax could have helped to pay for some of these costs and ensured the main beneficiaries of unprecedented energy prices rises paid a fairer share to alleviate the burden of those being hit the hardest. Government plans will raise £5bn. A proposal by Tax Justice UK of a 95% tax on excess profits would have raised over twice as much (£12.5bn).

As the majority of those living in poverty women continue to be the shock absorbers of poverty. Without ambitious long-term investment to tackle the root causes of this scandal, women will continue to be disproportionately impacted by economic shocks.

-ENDS-

About the Women’s Budget Group

The Women’s Budget Group is an independent network of leading academic researchers, policy experts and campaigners. Our vision is of a caring economy that promotes equality between women and men.

Download our briefing on The Gendered Impact of the Cost-of-Living Crisis here.

Find our Spring pre-Budget briefings here.

For more information or further comment, contact Sarah Ronan, 07399782336, sarah.ronan@wbg.org.uk