What Liz Truss’s new government could have done in its ‘mini budget’ — but hasn’t
The mini budget from Liz Truss’s new Chancellor Kwasi Kwarteng has come under fire for only helping the rich. So what’s missing?
by: Isabella McRae and Sarah Wilson
23 Sep 2022
The Chancellor Kwasi Kwarteng leaves 11 Downing Street to deliver The Growth Plan to parliament. Image: HM Treasury/Flickr
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Liz Truss’s new government has unveiled what it is calling a “growth plan” and what has been widely called a “mini budget”, outlining the measures and policies it will implement to tackle the ongoing cost of living crisis.
But with the scale of the problem and the sweeping nature of reform new Chancellor Kwasi Kwarteng is proposing, the title sounds like the mastery of understatement.
“This is not a mini budget,” a Westminster insider recently told the Daily Mail. “It’s massive.”
Many of the policies have already been panned as inadequate for assisting those most in need, and the removal of a cap on banker’s bonuses has been particularly derided for only benefiting the very richest in society, alongside cutting corporation tax, abolishing the highest rate of income tax and getting rid of taxes on home purchases.
Scrapping the increase to national insurance, meanwhile, also benefits higher earners the most, given they pay more. Pensioners and those on low incomes don’t pay the tax at all.
From the climate crisis to stagnating wages and a vastly overheated housing market, the government shouldn’t be short of issues to address. Here’s what experts say should have been included in the mini budget to actually tackle them.
Campaigners are urging the government to increase basic universal credit entitlements so that, as a minimum, people can afford the essentials. But the government hasn’t raised benefits in its mini-budget.
Research from the Trussell Trust found almost two-thirds (64 per cent) of universal credit claimants had to spend July’s first cost of living payment on food. More than two million people on universal credit skipped meals between June and August. And 38 per cent of claimants said they’d gone a whole day with no food at all or just one meal in the last month because they couldn’t afford to buy enough food.
The government removed the £20-a-week universal credit uplift in October, which meant a loss of more than £1,000 a year for claimants. Campaigners including Enough is Enough and Gordon Brown — as well as The Big Issue — have called on the government to reinstate the uplift.
Emma Revie, chief executive of the Trussell Trust, said: “The government must act now to protect people from harm. This means at least doubling the additional support offered to people on the lowest incomes and rethinking the deductions from the very payments that are meant to help them.”
The Joseph Rowntree Foundation has also called for the government to introduce targeted support for low-income households. Rebecca McDonald, the foundation’s chief economist, said at the beginning of this month: “The failure to offer further targeted support will feel like a knockout blow to the millions of people agonising about their finances.
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“The promise of a growing economy on the horizon will be cold comfort when people have seen their benefits payments fall behind inflation and other bills continue to rise. This is why the government must do more in its fiscal statement to stop the poorest going without the essentials even after big energy price rises are frozen. Those suffering hardship now deserve to know what additional support they will get as cost of living pressures continue.”
Increase minimum wage
More and more workers are going on strike as their pay is not rising in line with inflation. The government raised the minimum wage by 6.6 per cent in April but this was immediately overtaken by sky-rocketing inflation rates.
The national living wage – which is the legal minimum paid to those aged 23 and above – currently stands at £9.50 per hour. For those aged 21 to 22, the national minimum wage is lower at £9.18 per hour. People aged 18 to 20 can expect to earn a minimum of £6.83, and those under-18 get £4.81.
Campaigners, such as at Oxfam and the JRF, have urged the government to raise the minimum amount employers can pay their workers to the “real living wage”. Independently calculated by the Living Wage Foundation, it currently stands at £9.90 for the majority of the UK and £11.05 in London.
Others have said even the real living wage doesn’t go far enough to make sure that workers have enough to live in the cost of living crisis. The Trades Union Congress is calling for a £15 minimum wage.
“Every worker should be able to afford a decent standard of living,” said Frances O’Grady, general secretary of the TUC. “But millions of low-paid workers live wage packet to wage packet, struggling to get by – and they are now being pushed to the brink by eye-watering bills and soaring prices.”
There are also pleas for the government to freeze social rents. Ministers have launched a consultation on plans to cap social housing rents from April next year, limiting rises to 3, 5 or 7 per cent. But campaigners want Truss to go further and stop social rents rising at all.
Activist Kwajo Tweneboa told the Big Issue earlier this month: “I’d want to see the new PM freeze social housing rental prices for tenants. This may impact providers’ ability to provide service like repairs but, as we’ve seen, it’s never been a priority.”
Suz Muna, of the campaign group Social Housing Action Campaign (SHAC), said even a cap at 3 per cent would be too high for many tenants. She argued it could lead to evictions, homelessness and “catastrophic consequences” for people’s physical and mental health.
“We argue that the government should set the rent cap at zero and extend this to service charges and shared owner rents,” Muna said. “If rents and service charges are increased next year, SHAC and partners are supporting non-payment of the increases.”
The Scottish government has announced a rent freeze for tenants in private and socially rented homes. Nicola Sturgeon said: “The Scottish government does not have the power to stop your energy bills soaring but we can take action to ensure your rent does not rise.”
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Lower energy usage
Green Alliance and a number of other environmental groups have called for greater action on reducing energy demand to bring bills and carbon emissions down.
Green Alliance says the government should fund a public awareness campaign on energy saving measures along with public advice centres to provide tips.
Climate think tank Hot or Cool recently estimated that the average UK carbon footprint will need to fall from an 8.5 tonne average to 2.5 tonnes by 2030 alone, with further reductions by 2050.
But the measures can go a long way in lowering energy costs for households and businesses. A mass programme of home insulation will be essential for keeping energy bills and carbon emissions low in the long run, according to many green and anti-poverty groups.
Labour says they would implement a decade-long, £60bn home insulation programme that would upgrade 2m households in the first year to save households £400 on bills annually.
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This programme would additionally create thousands of skilled green jobs.
While they’re at it, Green Alliance also says that the government must protect the Energy Company Obligation, in which energy companies fund home insulation for the poorest households and move green levies on electricity bills into general taxation.
These are extra costs added to energy bills to fund green projects which Truss has floated removing. The aim is to lower energy bills more quickly, but ditching green levies would stop funding for many of the long term projects which — such as better insulation — which would keep energy bills down for good.
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