Thinktank Urges Sunak To Increase Benefits Amid Dire Cost Of Living Outlook
According to a UK thinktank, Chancellor of the Exchequer Rishi Sunak should increase benefits and pensions amid the cost of living crisis as this would provide four times more support to low-income households than abandoning the national insurance hike scheduled for next month.
The Resolution Foundation claims that uprating benefits by 8.1% rather than the planned 3.1% to keep up with inflation would be far more beneficial than abandoning the government's planned national insurance increase. According to the thinktank, this would deliver, “four times more support to the bottom half of the income distribution per pound spent, than scrapping the rise in national insurance contributions (NICs).”
The Resolution Foundation’s report suggests that scrapping the 1.25 percentage point rise in national insurance contributions for employees and employers would lead to half of the gains going to the richest fifth of UK households. While an 8.1% rise in benefits and pensions would set the government back approximately $9 billion, it would see three-quarters of the support go to people in the lower half of UK incomes.
The Resolution Foundation’s recommendations come as its principal economist, Adam Corlett, warns that “rapidly rising inflation is on course to bring about the biggest income squeeze families across the UK have faced since the 1970s [...] Low-to-middle income households will be hardest hit by the cost of living squeeze, especially when the energy price cap rises and should therefore be the priority for support.”
