Britain has one of many meanest welfare methods in Europe as unemployment advantages have failed to trace wages, a senior economist has warned.
It comes because the Chancellor Jeremy Hunt considers chopping advantages together with Universal Credit forward of Wednesday’s Autumn Statement. Typically ministers use the September determine for inflation when rising working-age advantages, which might imply a 6.7% hike.
But Mr Hunt has not dominated out utilizing October’s far decrease determine of 4.6%, which economists say would reduce Treasury spending by billions. He argued on Sunday the Government must take “difficult decisions to reform the welfare state”.
Speaking on Sky News, the Director of the Institute for Fiscal Studies (IFS) Paul Johnson, mentioned lots of people are presently out of labor “in a time of a tight labour market”.
And he warned: “We do have presumably the meanest welfare system in Europe when it comes to the way it treats those that are unemployed. “The level of unemployment benefits have not risen in real terms in more than 50 years, whilst earnings and so on, have gone up two and a half three times. The level of that benefit is way below where it used to be relative to earnings.”
With speculation rife over tax cuts, the IFS chief also highlighted the Tories have put up tax over this Parliament more than any Parliament in history. He said: “The fact is he and his predecessors have put up tax extra over this Parliament than has occurred over any Parliament in historical past.
“That’s because they’ve had no choice really, because the public finances are in such a mess. We’re spending so much on debt interest, we’re actually spending more on other things, the economy is doing dreadfully badly, the population is ageing, all of those things are pushed in one course.
“The subsequent actually hanging factor for folks to grasp is, for all of my lifetime, and I’m knocking on a bit now, taxes have been 32%-33% of nationwide revenue. “They’ve suddenly ratcheted up to 36%-37% over this Parliament. Now, my guess is they’re not going to go back down to where they’ve been over much of my lifetime, because of all of those pressures.”
Appearing on BBC’s Sunday with Laura Kuenssberg present the Shadow Chancellor Rachel Reeves additionally known as for advantages to be elevated by the upper price. She mentioned: “If you pick and choose from year to year which inflation number is the cheapest thing to do, then what you see is the gradual erosion of people’s incomes.
“Half of the people who find themselves claiming Universal Credit are additionally in work. This is to prime up low pay and insecure work. “I don’t think the Government should just pick and choose for them – they have a responsibility to ensure that everybody can afford in a civilised country to put food on the table and pay their rent and pay their gas and electricity bills”.
The senior Labour determine additionally pledged to maintain utilizing September’s inflation price to extend advantages if her occasion wins energy on the subsequent normal election.