By Jack Mendel
The government will have to decide which “unpleasant combination” of investment and benefit cuts will fuel its mini-budget stimulus package. a leading think tank has said.
Prime Minister Liz Truss is appearing to stick with to Chancellor Kwasi Kwarteng’s mini-budget plans, despite the Tories sinking in the polls overnight with YouGov saying Labour now has a 33 point lead.
In a bid to make savings to pay for a £45bn stimulus, it has been reported ministers are looking to cut benefits in real-terms, saving £5bn.
The commitment to uprate benefits in line with inflation was a policy put forward by Rishi Sunak, with some of the criticism levelled at the government for suggesting the move against the backdrop of lifting the bankers’ bonus cap.
The Resolution Foundation, a think tank focusing on poverty, warned the government would require “spending cuts that are broadly the same or bigger than George Osborne “ during the coalition years.
Calling them “painful policy choices”, the foundation said uprating benefits, including the state pension by earns instead of inflation would “cost a typical low-income working family with two children over £1,000 a year.”
Torsten Bell, the Resolution Foundation’s chief executive said “without U-turns on some tax cuts, the Chancellor has eight weeks to decide which unpleasant combination of growth-reducing public investment cuts or income-reducing welfare cuts he is going to announce.
The plan was also criticised by the Joseph Rowntree Foundation, a charity which campaigns against poverty. Its senior policy adviser, Iain Porter, said “it is shocking to hear the Government suggesting that they may not do what Rishi Sunak promised and uprate benefits by inflation next April as usual.”
“This will mean yet another devastating blow to the finances of people on the lowest incomes and will cause fear for millions”.
This comes after the government’s historic intervention to cap energy bills to an average of £2,500, with soaring gas bills likely this winter amid the war in Ukraine.
Porter added many would view it as “morally indefensible” for the PM would cut benefits while also giving a tax break to the richest.
During a series of TV interviews yesterday, the Prime Minister acknowledged “difficult times for people” but “wouldn’t apologise” for giving tax cuts to the rich.
Insisting her government “fiscally responsible”’ and would “bring debt down over time”, she and chancellor Kwasi Kwarteng will meet the OBR today.
The government has been approached for comment.
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