New prime minister must double support for struggling families to £30bn

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The new prime minister will have to at least double the amount of available living support costs – from £15 billion to £30 billion – to protect Britain’s most vulnerable households this winter, experts have told TUSEN.

The warning of anti-poverty campaigns came when Liz Truss, forerunner of the conservative leadership, stated that she will not offer “handouts” to those hit by unprecedented increases in energy prices, preferring instead tax cuts that experts warn that these will disproportionately benefit the wealthy.

Her comments drew a rebuke from leadership rival Rishi Sunak, who said it was “just wrong” to rule out an increase in direct support to households at a time when the energy price cap could rise from £1,971 now to a staggering amount. £3,700 in the spring.

Sara Ogilvie, Policy Director at Child Poverty Action Group, said: TUSEN that the prospect of sharp price hikes for essentials like food and energy was “terrifying” to millions of families who had already cut to the bone after a decade of welfare freezes and low wages.

“Their closets are bare,” she said. “Families are terrified – it’s no exaggeration to say that.

“Four million children already live in poverty, but we now know that for the lowest-income families – and who are now even moving into middle incomes – their income just doesn’t match their expenses, an increasing amount is going to go up and they’re afraid they’re going to lose their bills. can’t afford to pay anymore.”

Mr Sunak’s promise of an April benefit increase in line with September’s expected inflation of around 10 percent will not be enough, said Ms Ogilvie, who said the increase should be brought forward to October.

“April will be late and by then 10 percent will be a cut in real terms,” ​​she said. “If families have to get through this winter without extra support, their finances will be absolutely busted at that point. Frankly, I don’t see how the government can’t do more.”

Jonathan Ashworth, the secretary of shadow work and pensions, denounced the battle between Ms. Truss and Mr. Sunak to succeed Boris Johnson as prime minister as a “fantasy island” debate separate from the real pain faced by voters from the Bank of England inflation forecast on Thursday to rise to 13 percent at year-end.

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But Keir Starmer was also pressured to give a more ambitious response to the crisis, with left-wing Labor MP Sam Tarry – who was fired from the front seat for doing TV interviews from a picket line – warning he was “blown over” will be unless working people see that he is on their side.

Sign up TUSENMr Tarry called for pandemic leave payments to help pay the energy bills of 40 per cent of households, and said Labor should openly discuss further taxation of excess profits and nationalization of energy companies.

James Taylor, director of strategy at Scope, a charity for the disabled, said four in 10 families, including someone with disabilities, already live in poverty, and many rely heavily on energy supplies to run medical equipment.

“A lot of them don’t have anything to cut back on,” Taylor said. “We will be looking for a new prime minister in September to announce something fairly quickly. The priority must be to get money to the people quickly, otherwise it will be catastrophic.”

Joseph Rowntree Foundation’s chief policy adviser, Katie Schmuecker, said investigations by the anti-poverty think tank showed that as early as May, there were 7 million households “without essentials, without food, without enough to properly heat their homes, skipping, not paying for the most basic toiletries”, and that number is expected to rise sharply in the coming months.

“The government urgently needs to reassess the aid that is being given,” said Ms Schmuecker TUSEN. “A typical low-income family will face additional costs of £2,500 in April 2023, compared to 2022.

“We need to see that support package double to absorb the kind of costs that people face.”

And James Smith, the Resolution Foundation’s research director, agreed that the magnitude of the projected increase in energy costs is now double what was expected in May when Mr Sunak unveiled his bailout package – worth £1,200 for the most vulnerable households – the volume of direct payments would have been increased by a similar level.

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“We don’t know exactly how much aid is needed, but we know that the money that Rishi Sunak announced when he was chancellor will not be nearly enough to prevent extremely bad outcomes for the economy as a whole, but especially for those on low incomes. who are most exposed to the cost of living crisis,” he said.

“The previous package in May had been scaled up to a letter from Ofgem stating that the price cap would increase by £850 to around £2,800 in October. We are now staring in the course of £3,500. We could be talking about another £15 billion.”

Mr Smith said: TUSEN it was “extremely odd” that the cost of living crisis has so far not been at the center of the Tory leaders’ debate, when it was clear that the “absolute first priority” for the incoming prime minister will be to help households get through the winter to assist.

“Whoever becomes the next prime minister will have to act quickly in terms of fiscal support, whether that be through an emergency budget or immediate steps to support households,” he said.

“Using the benefit system is perhaps the most targeted and best way to do this. The tax system is not doing well, partly because the most vulnerable do not tend to pay a lot of tax.”

Conservative MP Nigel Mills, who previously clashed with the benefits leadership, said it was “necessary and probably inevitable” for the new prime minister to act.

“They’ll have to,” he said. “The party will expect it, the parliament will expect it, the country will expect it.”

Action could take the form of an increase in Mr Sunak’s existing one-off payment of £650 to benefit claimants or an increase in the winter fuel payment for retirees, he suggested.

“With bills of this size, you can’t just say it’s people on benefits who need help,” he said TUSEN. “It will also affect a lot of middle-income people. This will be the most sweeping reset for the economy.”

Ms Schmueker said the long-term solution should be to reshape the social security system and increase benefits that have hit a 40-year low.

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But she said it would be “unreasonable” not to act immediately to relieve households who are now faced with the choice between running out of essentials, skipping their bills, or taking on potentially devastating debt to loan sharks — this everything will have negative consequences in the long run.

“The best option, I think, is that we would advocate urgently reassessing the immediate support package and looking at doubling it,” she said. “And then start doing the right hard work to not just swing from emergency to emergency, but actually rebuild our eroded social security system.”

Mr Ashworth said well-being had so far been conspicuously absent from the Tory leadership debate.

Labor heard stories of retirees eating cold food and taking cold showers to conserve energy, people working at food banks and people turning down the supply of fresh food because they turned off their fridges. A charity had had its offer of a free fridge-freezer turned down because the recipient said the freezer element would consume too much power.

“This is going to be a devastating winter and all we’re getting from Tory leaders is these fantasy island tax cut commitments that will disproportionately benefit the wealthy,” said Mr Ashworth.

“The cost of living must be the government’s number one priority. Families and retirees look to a winter of hunger or hypothermia, and yet it has not been addressed in any meaningful way in the Tory campaign.”

When Ms. Truss first turned down the handouts, the spotlight on the Tory match came on benefits.

Mr Sunak said her promised tax cuts would be worth just £170 a year for a typical single earner household or £186 for one with two incomes of £20,000 each.

He declined to outline what help he would provide as prime minister, but said he would certainly look to do more.

“We have to take this situation seriously,” said the former chancellor. “It’s just wrong to rule out further direct support at this point, as Liz Truss has done.

“And besides, her tax proposals won’t help much people like retirees or low-income people who are exactly the kind of families that need help.”

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