Mayor says Spring Statement fails to address ‘triple whammy’ of energy price hikes, tax increases and rising inflation
- Sadiq disappointed Chancellor did not scrap National Insurance rise altogether
- Insufficient help for businesses struggling to recover from pandemic
- Government still refuses to adequately fund Transport for London and Metropolitan Police
The Mayor of London, Sadiq Khan has warned that the Government’s Spring Statement fails to meet the needs of Londoners who are facing a ‘triple whammy’ of energy price hikes, tax increases and rising inflation
With inflation now above six per cent, Sadiq had called on the Chancellor of the Exchequer Rishi Sunak to use today’s Spring Statement to address the spiralling cost of living crisis, which is having a dramatic impact on the lives of Londoners, particularly the poorest households and is being made worse by the war in Ukraine.
Recently, the Mayor revealed that nearly 80 per cent of Londoners have seen their cost of living increase over the last six months. In addition, 34 per cent of Londoners have struggled to pay bills and 13 per cent say they are going without essentials or relying on credit.*
While there was some welcome support today, the Mayor believes the Chancellor should have gone much further. While he is pleased that the Chancellor has increased the National Insurance threshold for the lowest earners, Sadiq is disappointed he did not go further and scrap altogether the 1.2 per cent increase in contributions that will be introduced in April. He also thinks the Chancellor should have committed to ensuring that welfare benefit payments are increased in line with inflation so that those who are most in need do not receive a real-terms cut.
While the Chancellor did offer some support for households today, he still refuses to cut VAT on energy bills or introduce windfall levies on energy companies who have spent years cashing in on soaring oil and gas prices enabling them to quadruple their profits.
Nor did the Chancellor provide a more significant package of measures to support London’s businesses, especially in those sectors which have been hit hardest by the pandemic and are taking longer to recover, including retail, leisure and hospitality.
The Chancellor did not make permanent the lower rate of 12.5 per VAT for the hospitality and leisure sectors, meaning this will come to an end in April. Increasing VAT on hospitality to 20% while energy and food bills are at record highs is a huge missed opportunity to ease pressures across the economy and accelerate growth and recovery
Sadiq had called on Government to support the return of international tourists back to London by reinstating tax-free shopping for overseas visitors – but again this fell on deaf ears.
The Mayor has also said the Spring Statement failed to provide the money to keep Londoners safe, deliver more affordable housing, tackle poor air quality and meet the ambition needed to achieve Net Zero and address the climate crisis.
The Mayor of London, Sadiq Khan, said: “Londoners are facing a triple whammy of energy price hikes, tax increases and rising inflation – and this Spring Statement failed to ease this cost of living crisis.
“It is completely misguided in the current economic climate for the Government to push forward with its National Insurance increase for millions of people from April. There was also precious little in this statement for businesses still struggling to make ends meet after the pandemic.
“London is the engine of the UK economy and we want to play an even bigger role in levelling up all parts of the. But if the Government continues to starve the capital of funding, particularly for our transport network and police, it will choke off the whole national recovery.”
The Mayor is also disappointed that the Government still refuses to ensure the Met is at the necessary strength of 6,000 additional police officers or address the £159m annual shortfall in funding from the National, International and Capital City (NICC) grant, which provides additional costs that come with policing the capital, including diplomatic protection, as well as policing major events such as protests, concerts, football matches and state visits.
While the Mayor welcomes the operational support that the Government has provided TfL during the pandemic, including the latest agreement to 24 June 2022, the current deal still only provides short-term funding to enable TfL to continue running services for a few more months.
Sadiq was therefore disappointed not to learn today of a significant commitment for future capital investment for TfL, which will play a critical role in avoiding significant and damaging cuts to tube and bus services and help the capital to achieve net zero and reduce air pollution.
While Sadiq continues to support the Government’s Levelling Up agenda, he remains concerned that the London, which has some of the most deprived parts on the country is being overlooked for investment.
He also reiterated his belief that the key to reducing inequalities and levelling up London will be fiscal freedoms to generate the capital’s own resources and target them in the most effective way to the areas of greatest need.