What London needs from the Chancellor’s Spring Statement
Spring has well and truly arrived, marked by the blossom in the trees and the speculation over what Chancellor Rishi Sunak will announce in his Spring Statement this week. We remain in unprecedented times, emerging and recovering from a global pandemic, but what Londoners are now most concerned about is costs, not Covid.
We know that the cost of living is the top area of concern for many Londoners, even ahead of crime and policing and the pandemic. Londoners have experienced the effects of rising prices as inflation has reached a thirty-year high. However, the worst is still to come as inflation and energy prices are expected to peak in April to a further high of 8%. On top of this, prices tend to be around 7% higher in London than the UK average which means Londoners, who have the highest levels of deprivation in the country, are in for a unprecedented difficult few months.
In light of all of this, Londoners are anxiously awaiting the Chancellor’s Spring Statement to find out what action he will take, if any, to ease the burden on those already struggling. There are a number of steps I believe he could take.
Firstly, I would like to see the Chancellor reinstate the Universal Credit uplift that came to an end in October. Since then, an estimated 130,000 more Londoners have been pushed into poverty, with this number likely to increase as the crisis worsens. To avoid a real terms cut on incomes for the poorest Londoners, the Chancellor should increase benefits by at least 7% in April to match inflation, and ensure support for housing costs increases in line with rents.
Energy bills form a key part of rising prices, as domestic gas prices have increased by 28%, and electricity prices by 19%, since January 2022. We know that the previous £140 Ofgem standard tariff rise was associated with an estimated 75,000 London households falling into fuel poverty. The energy price cap will increase in April by 54% meaning Londoners will have to pay up to £1,971 per year. This will see further Londoners plunged into fuel poverty.
The Chancellor needs to act now on eye-watering energy costs. Londoners are already having to choose between feeding themselves or feeding their children. It is time for the Government to look at a windfall tax on oil and gas companies and use that money to support Londoners through rocketing prices.
Here in London, we have been leading the calls for the 5% VAT on energy bills to be cut for the next year and for the eligibility criteria for the Warm Homes Discount to be extended and increased. Our proposals garnered some cross-party support on the London Assembly, along with other motions proposing actions to tackle the cost of living. These motions called for reinstating the £20 a week Universal Credit uplift and an increase in the National Living Wage to make it a real living wage in April. I am also calling for a delay to the proposed National Insurance hike, a call which has received support from business leaders and politicians across the political spectrum, which will affect the lowest paid workers.
Whilst the cost of living is understandably the biggest focus for the Spring Statement, in terms of supporting the UK’s economy, the best thing the Chancellor can do is invest in the capital. London is the engine of the country’s economy, and when London succeeds, the whole country succeeds. The Government needs to recognise that in levelling up, it is not a race to the bottom. The paltry 3.8% given to London, in the first round of the levelling up grant, giving 16p per head to Hackney and £148 per head to Bromsgrove, was unacceptable considering that London has the most deprived communities of any region in the country. The success of London is critical to levelling up those parts of the country that have been left behind over the past decade.
As such, I want to see the Chancellor provide support and a package of measures for London’s businesses which continue to be impacted by the pandemic. Industries such as retail, leisure and hospitality are still suffering and will continue to do so as COVID continues to impact on our lives. Alongside this, I would like to see the Government use this opportunity to reform Statutory Sick Pay, and bring the rate up to a level at which people can afford to live. This will support people to keep the spread of COVID at bay and help the economy to recover.
The situation facing Londoners is incredibly serious. Martin Lewis, of MoneySavingExpert, remarked this weekend, that he is now ‘out of tools’ to help people get through this crisis and the Government must intervene. This is the Chancellor’s opportunity to step in and step up, to save people from severe financial hardship. I, and others, will be watching intently on Wednesday, to see whether he is able to deliver for Londoners.