The biggest event since my last column was the Chancellor delivering the Autumn statement last week. While there are things in there no government would want to have to do – and Conservative governments never want to have to increase taxes – the economic challenges facing the UK and the world are stark.
The Government spent over £400 billion protecting jobs and livelihoods with some of the most generous schemes globally. We knew this money would have to be paid back if it wasn’t just to be left to our children and grandchildren as a debt, but as we’ve emerged from Covid we’ve had the additional pressure on spending, energy and food prices caused by Putin’s invasion of Ukraine.
While the Government has admitted mistakes were made under the premiership of Liz Truss – something she admitted herself – it is the context of Covid and Putin that explains the situation the UK and others countries are facing. Most of the measures the Truss Government introduced have been reversed and the IMF believe one third of the world already is – or soon will be – in recession.
Despite the difficult choices made in the Statement there are a number of things I welcome. There is going to be additional money for both health and education, to the tune of an extra £11 billion combined over the next 2 years. While there will be additional money taken in taxes, this will be borne largely by those who can most afford it; there will be no increases in the headline rates of taxes like income tax and we will still have a lower tax burden than countries like Germany, France and Italy.
One of the things I most welcome is the support that is being made available to help the most vulnerable. The triple lock on pensions will continue, which means with the current rate of inflation, pensioners will see the highest cash increase in the basic state pension in history (already in 2021, thanks to the Government’s triple lock, it had reached the highest level relative to earnings for 34 years).
Similarly, I welcome that benefits will be increased by inflation too. There is a myth some people spread that everyone on benefits is too lazy to work. In actual fact, many of the people on benefits are working but can’t get enough hours; or they have children under the age of 2 they have to look after; or they are severely disabled and can’t work – which is actually when you get the highest level of benefits. Those who could work more should, but we must protect the incomes of those who can’t.
We face difficult months ahead, but the Government is taking the right approach.
