23 September 2022

As Britain faces a hard winter, the 1 per cent will get richer

That is Kwasi Kwarteng’s logic.

Illustration by Gary Waters / Ikon Images

In the tangle of a budget that has not yet been costed, only one number really matters to Brits this winter: 96 per cent. That’s how much higher the average energy bill will be than it was last winter, even after the government’s price freeze. By 1 October, when the price will rise by an average of 27 per cent on what it is now, most of the UK will be trying to avoid putting the heating on.

Living standards are falling at the fastest rate since the Fifties. Disposable income is at a record low. Councils are preparing municipal buildings to be used as “warm banks” for people who cannot warm up at home. Wages are lagging behind inflation: the average annual wage growth is 5 per cent, and less than 2 per cent if you work in the public sector. A pint of milk costs up to £1.05. And nor can they get a doctor’s appointment, or hospital treatment, or even an ambulance on time anymore. These are the circumstances Britons are living in.

On top of this, Chancellor Kwasi Kwarteng in his mini-budget today (23 September) added both insult and injury.

First, the insult: a bonanza of tax cuts for the rich. Kwarteng scrapped the top rate of tax (which was 45p on those earning above £150,000), and lifted the cap on bankers’ bonuses, as well as cancelling a planned rise in corporation tax. He also reduced stamp duty for house buyers, but introduced nothing for tenants whose rents are rocketing.

Second, the injury: a benefits cut. People in work on low earnings who receive Universal Credit will have to spend six hours longer a week from January actively searching for more or better-paid work, or face a reduction in their benefits. With the UK’s childcare costs one of the highest in the OECD, and the fact that work doesn’t always pay (in-work poverty is at record levels, after all), this cut is not the obvious incentive to work that the government claims it is.

Britain is now a country of food banks, warm banks and even baby banks (for parents who cannot afford the basics for their children). Run on donations and by volunteers, these are standing in where the state should be. Perhaps the next thing would be tax banks: where the rich, who will soon be wildly better off, can pay in some of their extra cash.