‘Frustrating’ spring statement fails to support vulnerable families, sector leaders say

Measures set out in Sunak’s mini statement include doubling investment the household support payment for vulnerable families to £1bn, a £3,000 increase to the amount people can earn before paying income tax or National Insurance and a 5p cut to fuel duty.

Small businesses will benefit from a £5,000 increase on the Employment Allowance from next month, while Sunak has pledged to cut the basic tax rate, for the first time in 16 years, from 20 per cent to 19 per by 2024. 

• Opinion: Universal credit cut reduces young people’s options

• Blog: Six ways policymakers can tackle rising child poverty

Plans to review the way the apprenticeship levy works and proposals to encourage businesses to take on more apprentices were also promised during Sunak’s speech in a bid to “get more young people into work”.

However, charities and organisations supporting struggling families say the pledges “will do relatively little to ease the financial pain these families are grappling with now and in the months ahead” amid the rising cost of living.

Forecasting by the government’s Office for Budget Responsibility shows that increasing energy costs could push inflation to a 30-year high of 8.7 per cent in the final months of 2022.

Charities have warned that a three per cent increase to Universal Credit planned for next month does not meet the current levels of inflation which stands at 6.2 per cent after ministers scrapped a £20 uplift brought in at the height of the Covid-19 pandemic. 

Impact of poverty

Imran Hussain, director of policy and campaigns at Action for Children, said:  “Better off families will be the big winners from the tax cuts, not those who need help the most.  

“Millions of families, still reeling from having had their Universal Credit entitlement reduced by £20 a week, are struggling with a devastating rise in energy bills and soaring inflation. 

“Right now, low-income families with children are paying a high price for the government’s poorly targeted cost of living response. We urge ministers to look again to ensure the value of benefits are protected from inflation which will continue to rise and that extra help is targeted on children in low-income families through Universal Credit.”

Mark Russell, Chief Executive of The Children’s Society, noted that “children were not mentioned once in the Chancellor's plans”.     

He described plans to increase the household support fund as “welcome” but branded them a “another short-term fix”.

“It's the same drip, drip, drip of funding that leaves councils hanging from one announcement to the next. It's not sustainable and doesn't allow councils to be strategic,” Russell said.  

“We're disappointed the Chancellor missed the chance to announce more targeted measures for children from low-income families, such as getting more children free school meals. We have been long campaigning for the government to make free school meals available for every family with children aged 16 or under who needs support from universal credit to make ends meet. That would ensure another 1.5 million children have a decent meal every school day,” he added.

Anna Feuchtwang, chief executive of the National Children’s Bureau, said without further action Sunak's "announcement of further support for vulnerable families through the Household Support Fund, will be completely undermined by the corrosive effects of poverty, that multiplies the demands on the resources of social services, schools and the NHS”.

“Growing up poor means being more likely to have a range of physical and mental health problems, be excluded from school, and taken into care. As well as the human cost, this inequality costs the Treasury billions through greater additional spending on public services.

“The need to prevent the destruction of living standards has never been so acute. And the case for investment in the early years, social care and health services, that babies, children and young people rely on, has never been so urgent,” she said.

Children’s social care

Charlotte Ramsden, president of the Association of Directors of Children’s Services, said “many children and families are facing a perfect storm of rising food, fuel and energy prices alongside increasing tax bills which will place enormous pressure on households and on living standards”. 

“There is clear evidence that one of the human costs of poverty is rising demand for children’s social care. While we recognise public finances are under huge strain it is a false economy not to fund children’s services properly and sustainably so that we can help children and families at the earliest opportunity, before their problems escalate. Furthermore, it makes no sense that England continues to be the only country in the UK without a child poverty reduction strategy,” she added.

Early years

Meanwhile, early years leaders have accused Sunak of “ignoring the early years sector again” after no funding was announced to support families struggling with the rising cost of childcare or exempt nurseries and childminders from business rates.

Neil Leitch, chief executive of the Early Years Alliance, said: “We are both frustrated and disappointed that, yet again, the early years sector has been ignored in the spring statement announcement.” 

“Many providers had hoped that the government could use this as an opportunity to reallocate the substantial underspend from the tax-free childcare scheme to the early years sector. However, the government’s failure to do so means that many early years providers will continue to struggle to make ends meet, and sadly, many will have no option but to close their business.”

Jonathan Broadbery, director of policy and communications, at the National Day Nurseries Association added: “The Chancellor has talked about supporting sectors affected by Covid and helping working families. There is one immediate step the Government can take and that is exempting nurseries from unfair business rates.

“The early years sector plays such a huge role in levelling up opportunities for all children and supporting working families. We want to see the government coming forward with tangible support to childcare providers that will help with their rising costs. Business rates returning in full to nurseries could add up to £12,600 of costs to an average nursery.”