Shadow Chancellor calls for increased benefits to fight poverty | Poverty


Rachel Reeves sees the clearest and most telling signs of poverty among schoolchildren in her Leeds West constituency. “You look at the kids and you just think, I know you’re poor.

“You can see it in school coats, especially in winter, and in school shoes. The kids don’t wear the proper school uniform, kind of a mix-and-match, and that’s really sad.

Earnings are two-thirds of the national average in the region she represents, just over £20,000 a year. “Although unemployment is low, many jobs don’t pay wages you can afford to live on,” Reeves says. “So many people rely on Universal Credit to supplement their income – 60% of people living in poverty today have a job.”

When Reeves first became Labor MP 12 years ago, there were no food banks. “Not because nobody cared, but because we didn’t need it,” she says. Now they are everywhere and in greater demand than ever as cost of living pressures intensify.

“We have set up clothing swaps and school uniform swaps, we have a baby bank with stuff for young children with nappies and clothes for kids. We regularly refer people to food banks. Schools help children with school uniforms. It’s really difficult.

What worries the Shadow Chancellor most, however, is that poverty is set to worsen in areas like Leeds West, as inflation soars and energy prices soar. She produces figures from the Resolution Foundation and other organizations showing that the number of people living in absolute poverty is expected to rise by 1.6 million over the next few years.

Rishi Sunak: “He really needs to show more empathy,” says Rachel Reeves. Photograph: Phil Noble/Reuters

His counterpart, Chancellor of the Exchequer Rishi Sunak, will deliver his spring statement in the House of Commons on Wednesday with Tory MPs among those urging him to take far more drastic action on the cost of living crisis.

Does Reeves think Sunak, one of the richest men in British politics, gets it?

“We’ll find out on Wednesday,” she said, adding that there are no signs that he will yet. “He really needs to show more empathy.”

As well as meeting his demands for a windfall tax on the huge profits of North Sea oil and gas companies, paying extra aid for energy bills and scrapping the planned 1.25 point increase percentage of National Insurance due next month, Sunak must , Reeves tells the Observer, increase benefits by about 6% (matching the expected rate of inflation for March) for millions of low-income people, including pensioners.

Under the current plans, benefits will only increase by 3.1%, as the level of increase was set in September last year, when that was the rate of inflation.

Many think tanks are now warning of an intolerable fall in real incomes, which will hit the poorest hardest, unless benefits are increased to match the level at which prices rise. Some, like the Resolution Foundation, are calling for an 8% benefit increase to match possible inflation later this spring.

“I think this is a historic moment,” said Reeves, which will show whether the government understands the plight of low-income people. “We haven’t seen such inflation for 30 years now. If the Chancellor sticks to his plans of six months ago, he will not be up to the challenge.

“The Chancellor should consider how to increase benefits fairly. They are supposed to increase with inflation and they are not at the moment.

She says he has the cash to act as VAT and other tax revenues have soared into the billions due to rising inflation.

In February, before Russia invaded Ukraine, Sunak unveiled what was billed as a £9billion emergency package to help people meet their energy bills. One element of the plan was a £200 bill discount for all households in October. The money would however be clawed back from everyone at the rate of £40 a year from 2023, so it was, in a sense, just postponing the pain. The second measure was a £150 rebate on council tax bills to be paid in April to those who had homes in bands A to D in England, with the Treasury making money available to devolved administrations to reduce the invoices of similar amounts.

Some believe Sunak will raise the £150 figure on Wednesday and freeze fuel taxes again or even cut them. Reeves says she would support such measures because the situation on the ground is so dire.

“I was talking to Citizens Advice and it recently got more referrals from people in debt to energy companies than they’ve ever seen before, and that’s before the hikes coming in April,” she says.

“People are really scared. Moms and dads are especially worried about what’s going to happen. If this government really wants to level itself, it must act.


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