The chancellor’s commitment to fiscal rules holds back the investment we need

The chancellor’s speech today shows a commitment to fiscal rules and veiled austerity at the expense of our public services

Hannah Peaker, director of policy at NEF, said:

“Rachel Reeves said the country voted for change but her statement today reaffirmed a commitment to the out-dated fiscal rules and veiled austerity measures that have left our public services in dire straits. While a pay rise for public sector workers is welcome news, the government needs to go much further with investing in public services to ensure that our children can learn in schools which are not falling down and our loved ones are able to get an operation without spending years on a waiting list.

The chancellor claims we can’t afford investment but there was also no mention of raising taxes on the richest who can most shoulder the cost. This would be a simple way for the government to protect the services we all rely on. Ensuring that taxation of income from wealth — such as dividends and capital gains — are taxed at the same rate as earnings from work, could raise at least £10 – 15bn a year.

This government needs to go much further as well and address the self-imposed fiscal rules which are holding back the serious levels of investment we need just to maintain our key services. They should be investing with ambitions to ensure everyone has access to good healthcare, education, childcare, affordable housing and cheap, clean energy — this is how we build a strong economy for the future.”

Restricting winter fuel payments a progressive step, but will still leave some families out in the cold

Chaitanya Kumar, head of environment and the green transition at NEF, said:

“The new Labour government’s first major decision on energy bills risks sending mixed signals to consumers and leaving some families out in the cold.

A significant portion of the £2bn winter fuel payment goes to pensioners with high incomes and wealth. Scrapping the payment and directing it to those on pension credit will make sure it prioritises those who need it most. But there are two problems: first, not all households in fuel poverty receive benefits, so the fuel payment does not make it to them. And second, for those most in need, the winter fuel payments are not high enough to make sure they can stay warm in the winter.

Energy bills will go up again in a few months, and the last few years have made it obvious how broken our billing system is. Instead of policy changes which will continue to mean some households are forced to live in dangerously cold homes, our new government should reform the system. A new National Energy Guarantee would give every household a guaranteed essential portion of energy for free or discounted, while charging more for those who use very high amounts of energy.”