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Business & Economy

Guest contributor – The big switch off

You know the cost of living crisis is really biting when the UK, a nation of TV fanatics, switches off.

According to recently announced figures from market research firm Kantar, more than 1.5 million streaming subscriptions were cancelled in the first three months of 2022.

Hardly surprising, really, in an environment where the cost of household bills, fuel and essentials continues to rise. 

The recent Spring Statement attempted to mitigate the pain felt by many, with headline announcements including an increase in the National Insurance threshold to £12,570 – which the Chancellor says will deliver employees an annual £330 tax cut – a fall in the basic rate of income tax from 20 pence to 19 pence in the pound, and a five pence drop in fuel duty.

The Government says the measures will help households navigate what continues to be an extremely uncertain landscape.

As ever, though, time will tell just how effective they are – and how much more, as a nation, we might need to switch off to save.

The Chancellor’s choices

Against a backdrop of spiralling bills, which have caused much financial belt tightening in households across the country, Chancellor Rishi Sunak’s recent Spring Statement set out plans to alleviate the cost of living crisis. But Nick Gray, North East-based research fellow at think tank IPPR North, says the man in charge of the UK’s purse strings missed key opportunities.

Words by Nick Gray
Research fellow at IPPR North 

As families and businesses across the North East know all too well, we are in the grip of a cost of living crisis. 

The Chancellor has the power and resources at his disposal to lessen the impact on those worse off. 

Yet in his recent Spring Statement, he chose to raise taxes during a cost of living crisis, while offering a tax cut two years down the line. 

He made the wrong decisions.

When we consider the tools available to Rishi Sunak to help people facing the most pressure on their living costs, we see that raising the point at which people start to pay National Insurance contributions is not the best option. 

In fact, the Chancellor’s choice to do so will bring twice as much benefit to the top 50 per cent of earners as to those who need it most. 

Meanwhile, people who aren’t working owing to, for example, disability, will not benefit at all. 

Nor will people in very low-paid jobs, who rely on Universal Credit to top up their income – 37 per cent of people in the North East who receive Universal Credit are in work.

In an area where we have seen the biggest increase in child poverty of any UK region or nation in recent years, we needed the Government to take a more logical approach. 

We needed action to help families right now, and to lay the foundations for a happier, healthier population, which could in turn boost our economy in the long run. 

What the Chancellor should have done – and what he can choose to do any day – is introduce an increase in Universal Credit and legacy benefits of 8.1 per cent, and raise child benefit by £10 per child per week. 

And instead of placing further pressure on ordinary workers, he could first fix our broken tax system, which taxes income from work at a higher rate than it does income from wealth.

The Chancellor could do so much more for people on low incomes in the North East by making different, progressive policy choices. 

Poverty is not inevitable – it is the result of decisions – and the decision not to target support to people who need it most will only trap more families in poverty’s grip. 

This is not ‘levelling-up’. 

If we want to prevent future cost of living crises, and provide good public services, then we need the Treasury to back ‘levelling-up’ the economy and provide the opportunity to live a good life.

A strong, fair, clean, locally-led North East economy is possible.

It’s time for the Chancellor to make the right decision and back us.