Raising benefits to match inflation ‘irresponsible’

THE poorest in society are less likely to enjoy the benefits announced in the Spring Statement last week because the support packages focused so heavily on those in work, according to the Government’s own economists.

Officials from the Office for Budget Responsibility (OBR) also told MPs that the Retail Price Index (RPI) of inflation – which influences train tickets, broadband bills and mobile phone tariffs – could soar above 10%. They also said the price of fuel could rise 6% next year once the 5p-a-litre cut in fuel duty comes to an end next year.

Answering questions from the Treasury Select Committee in its inquiry into the Spring Statement, officials also said the Government’s attempts at boosting business investment had fallen short due to continued uncertainty in the economy.

OBR chairman Richard Hughes said: “The Chancellor has used a combination of the council tax systems, supporting energy bills and the tax system to deliver support and relief for people facing this cost-of-living squeeze, rather than the benefits system. One of the limitations of that is that you are limited by how many people you can reach through the tax system. If people aren’t in work, or working the number of hours they need to get them beyond the personal allowances and thresholds, they are more difficult to reach through the tax system than they would be through something like Universal Credit, which reaches people lower down the income scale.”

Mr Sunak told the committee, chaired by Central Devon MP Mel Stride, that the Government cannot compensate everyone for the squeeze on living standards and it would have been “irresponsible” to have increased borrowing by adding £25 billion to raise benefits by the current rate of inflation.