Our thoughts on the UK Government’s Budget

The Bevan Foundation team give our initial reaction to the Chancellor’s “back to work budget”

Following six months in the job the Chancellor Jeremy Hunt has announced his first Budget. Whilst the UK may be facing less economic turmoil than when he became Chancellor in the autumn, life for many in Wales remains incredibly difficult, and the economic outlook remains gloomy. The major question that many will be asking therefore is, does the Budget get to grips with these issues? 

Positive announcements

There are certainly announcements to welcome in the Budget.

The decision to extend the Energy Price Guarantee by three months to the end of June will come as a relief to many. If energy price forecasts are correct, and energy prices do come down over the summer, then the worst of any increases in gas and electricity prices may be behind us. However, the decision to retain the Energy Price Guarantee will not lead to an immediate reduction in the cost of gas and electricity from levels that saw 39% of people in Wales report that they had gone without heating in the three months to January.

The announcement that Universal Credit childcare payments are to be restructured is also welcome. It has long been known that the current system, where low-income parents have to pay in advance for their childcare and claim back the fees, is not fit for purpose. Moving to a system where help with costs is given in advance will remove barriers to work and will ensure more children have the opportunity of the educational benefits offered by childcare.

It remains to be seen if the extension of universal free childcare to children aged 9-months to 2-years will be introduced in Wales.  If a similar scheme is introduced by the Welsh Government, we strongly urge them to include the children of parents who are learning or training and to provide some ‘respite childcare’ for families in which both parents cannot work because a parent or child is disabled. It goes without saying that childcare should be high quality, appropriate for disabled children and people from diverse cultures.

Need more detail

The impact some of the Chancellor’s other statements remains uncertain as we await more detail.

The decision to scrap Work Capability Assessments, for example, could have a positive effect on disabled people, making it easier for disabled people to return to work without fear of losing their benefit. Introducing such a change will be complex with the ongoing challenges of rolling out Universal Credit serving as a cautionary reminder of how difficult reforming benefits can be.

Another area where more detail is needed is the changes announced to the immigration system. The Chancellor announced the addition of five construction occupations to the Shortage Occupation List with a full review of the list to be undertaken by the autumn. We will have to wait until the autumn to see if there will be more significant reform. In the interim, however it seems illogical to deny asylum seekers the right to work when there are labour shortages. 

The missing issues

Despite there being welcome announcements in the Budget there are some areas where there is a need for action that are missing completely.

There was very little announced in the Budget that will provide support to households struggling with the cost-of-living crisis beyond the extension of the Energy Price Guarantee.  Whilst the UK Government did make some announcements in the autumn on the provision of additional support for low-income households for the next financial year, the fact that there is so little direct action on the cost-of-living crisis is a source of concern. It should be remembered that even if inflation does come down as forecast by the end of the year, there are thousands of people in Wales already struggling to make ends meet. The extent of the Chancellor’s focus on work in his Budget, suggests that the focus of our politicians may already be starting to drift from this very real problem.  

Unsurprising though it is, it is also disappointing that the Chancellor did not uplift Local Housing Allowance (LHA) rates to at least the 30th percentile of rents in his Budget. Recent research by the Bevan Foundation has found that there is an acute shortage of properties to rent at LHA rates in Wales. The Chancellor’s failure to act on this issue is likely to worsen this situation, deepening the very real concerns of low-income households in the private rental sector across the nation.