# Indefensible’: UK’s Sunak under fire over response to cost of living crisis
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-03-24
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Rishi Sunak Criticised for Not Providing Enough Help to
Meta Description: British finance minister Rishi Sunak faces backlash for not providing enough help to low-income families as living standards plunge. Critics slam tax cuts while
URL: https://financedigest.com/indefensible-uks-sunak-under-fire-over-response-to-cost-of-living-crisishtml

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By William Schomberg and Andy Bruce

LONDON (Reuters) -British finance minister Rishi Sunak faced broad criticism on Thursday for not giving enough help to poorer households as the country heads for its biggest drop in living standards since at least the 1950s.

After earning plaudits for his response to the coronavirus crisis in 2020, Sunak was under fire for what fiscal analysts said looked like a plan to hold back money for giveaways to voters ahead of Britain’s next national election.

Sunak announced reductions in fuel duty and taxes on wages including an income tax [cut in 2024 in a budget](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding") update on Wednesday, telling parliament it represented the biggest net cut to personal taxes in over 25 years.

But the measures were met with howls of protest, and not only from opposition lawmakers and anti-poverty campaigners.

The Resolution Foundation, a think-tank which focuses on living standards, said only one in eight workers will [see their tax bills fall](https://www.financedigest.com/uk-employers-see-slight-fall-in-pay-awards-over-2023-xperthr.html "UK employers see slight fall in pay awards over 2023 – XpertHR") over the next two years.

It also said absolute poverty was expected to rise by 1.3 million people next year, including half a million children, as [inflation heads for around](https://www.financedigest.com/no-messing-around-with-red-hot-inflation-five-questions-for-the-ecb.html "No messing around with red-hot inflation: Five questions for the ECB") 9% later this year, outpacing pay and welfare benefits.

Rishi Sunak has prioritised rebuilding his tax-cutting credentials over supporting the low-to-middle income households who will be [hardest hit](https://www.financedigest.com/digital-divide-hits-rural-black-americans-hardest.html "‘Digital divide’ hits rural Black Americans hardest") from the surging cost of living,” Resolution Foundation Chief Executive Torsten Bell said.

Britain’s budget watchdog, the Office for Budget Responsibility, said Sunak undid only one-sixth of his previously announced [tax rises aimed mainly at funding](https://www.financedigest.com/uk-drops-plan-to-tax-sovereign-wealth-funds.html "UK drops plan to tax sovereign wealth funds") health and social care after the COVID-19 pandemic.

Newspapers, which have long cast Sunak as a future successor to Prime Minister Boris Johnson, criticised him for not doing enough to [support people](https://www.financedigest.com/banks-need-to-digitise-financial-wellbeing-support-to-help-young-people-manage-through-this-recession.html "Banks need to digitise financial wellbeing support to help young people manage through this recession") on the lowest incomes.

The Daily Express ran a headline: “The Forgotten [Millions Say:](https://www.financedigest.com/mobile-games-developer-huuuge-says-has-24-2-million-at-svb.html "Mobile games developer Huuuge says has .2 million at SVB") What About Us?

A survey published by polling [firm Opinium after Sunak’s announcement](https://www.financedigest.com/aon-announces-agreement-to-acquire-risk-management-firm-creating-a-comprehensive-cyber-risk-management-advisory-group.html "Aon announces agreement to acquire risk management firm, creating a comprehensive cyber risk management advisory group") – but conducted earlier this month – showed opposition Labour Party leader Keir Starmer and his would-be finance minister Rachel Reeves had overtaken Sunak and Johnson when people were asked who they trusted most to run the economy.

In media interviews on Thursday, [Sunak defended his plans](https://www.financedigest.com/british-pm-sunak-expected-to-shelve-plans-to-privatise-channel-4-ft.html "British PM Sunak expected to shelve plans to privatise Channel 4 -FT"), offering scenarios showing how many workers stood to be better off. He also said he could not completely offset the jump in inflation which has been aggravated by the [conflict in Ukraine](https://www.financedigest.com/gorbachev-died-shocked-and-bewildered-by-ukraine-conflict-interpreter.html "Gorbachev died shocked and bewildered by Ukraine conflict – interpreter").

But the Institute for Fiscal Studies, another think tank, said his decision last year to [raise social security rates](https://www.financedigest.com/boe-raises-rates-again-as-investors-look-towards-end-of-hikes.html "BoE raises rates again as investors look towards end of hikes") from April – which was only partially softened on Wednesday by a higher payments threshold – combined with a lower income tax rate made the tax system less equitable and less efficient.

IFS director Paul Johnson said this would [widen the gap between taxes on earnings and those on pensions and unearned income](https://www.financedigest.com/uk-income-inequality-widens-after-pandemic-dip.html "UK income inequality widens after pandemic dip").

His choice to increase national insurance rates and reduce the basic rate of income tax looks, to me at least, indefensible from an economic point of view – though one can see the political attractions,” [Johnson said at a news conference](https://www.financedigest.com/one-minute-to-midnight-says-johnson-as-climate-conference-opens.html "“One minute to midnight” says Johnson as climate conference opens").

Richard Hughes, chair of the OBR whose forecasts underpin the budget, said [Sunak remained on course to push the government’s tax](https://www.financedigest.com/uks-sunak-under-fire-over-cost-of-living-defends-his-tax-cut-plans.html "UK’s Sunak, under fire over cost of living, defends his tax cut plans") take to the highest since the 1940s.

He also said the roughly 30 billion pounds of wiggle room that Sunak has kept for [future spending or tax cuts could easily be wiped out if there were further rises in energy prices or higher-than-expected Bank](https://www.financedigest.com/bank-of-the-future.html "Bank of the future") of England interest rates.

(Additional reporting by Alistair Smout; Writing by William Schomberg; Editing by Hugh Lawson)


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