Rishi Sunak faces UK lawmakers over response to living costs crunch

Rishi Sunak faces a grilling from lawmakers on Monday as pressure mounts on the British finance minister to do more to relieve the cost of living crisis.

Sunak, regarded as a leading contender to succeed Prime Minister Boris Johnson, has been widely criticized for failing to do enough in his mini-budget last week to help the poorest households cope with soaring energy bills.

On Monday afternoon, the chancellor of the exchequer will be forced to defend his 9 billion-pound ($12 billion) package of tax cuts to Parliament’s cross-party Treasury Committee. Hours earlier, officials from his fiscal watchdog, the Office for Budget Responsibility, are due to give evidence to the same panel.

In his Spring Statement, Sunak cut auto fuel duty and increased the amount workers can earn before paying social security contributions, but analysts and political opponents said the giveaways amounted to too little.

OBR forecasts show living standards are on course to fall more in the coming financial year than at any time since records began in 1956, with inflation expected to peak at close to 9 per cent toward the end of 2022. The Resolution Foundation think tank estimated that the lack of additional welfare support will push 1.3 million Britons into absolute poverty, including 500,000 children.

With energy prices due to rise sharply again in October, Sunak is considering further measures, including a repeat of a one-time tax rebate, according to the Sunday Times. Education Secretary Nadhim Zahawi kept the door open in a round of broadcast interviews Sunday.

“I think he (Sunak) will continue to keep an eye on this, it’s only right,” he told Sophy Ridge On Sunday on Sky News. “Energy prices are volatile, inflation remains high, so it would be absolutely irresponsible to say ‘job done.”’

Mr. Tax

Sunak was also slated for announcing that the basic rate of income tax will be cut in 2024, the likely year of the next general election. More broadly, the giveaways announced on March 23 undo only a fraction of previously announced increases, meaning the tax take as a share of GDP is still on course to reach its highest level since Clement Attlee’s Labour government in 1949.

“He is a tax-rising chancellor, he is Mr Tax and it’s the British people who are paying the price,” Jonathan Ashworth, work and pensions spokesman for the opposition Labour Party, told Sky.

Sunak, who was widely praised for his handling of the economy during the pandemic, has seen his popularity slump in the wake of the Spring Statement. For the first time since he became chancellor in February 2020, a majority of voters thought he was doing a bad job, a YouGov survey found.

His rating was still higher than Johnson’s, however. Prior to the Ukraine war, Johnson was facing calls to resign from within his own party over reports of law-breaking parties at Downing Street. While the pressure has since abated, the danger is not over with the Metropolitan Police still investigating the alleged gatherings.

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